Friday, 13 June 2014

Insurance Terms 101: What is a Deductible?

If you are new to the world of insurance policies, a term that you will often see being used by people and companies is "deductible".

Quite simply, the deductible is the amount of money that you agreed to pay after making a claim. As you probably know already, an insurance policy does not protect you fully from financial loss. As an insured, it is your responsibility to cushion some of the fees associated with the claim.

The deductible, as we already mentioned, is something that you have the power to change at any given time. While the minimum amount tends to vary from policy to policy, the importance of choosing an adequate amount is something that should never be underestimated. For many people, choosing a higher deductible has the potential to help reduce the costs of their insurance premiums by up to 10%. While it can be a good idea, we only recommend doing this as a last resort.

Deductibles vary from policy to policy. This is not surprising. The truth, however, is that many other factors are also part of the picture. As an example, a doctor who applies for a professional liability insurance policy will expect to pay higher premiums and a higher deductible than a teacher who applies for the same policy. This is mostly due to the higher risks associated with the medical profession.

With that being said, we always recommend that you spend some time consulting with your insurance broker before choosing a deductible. He or she is there to guide you along the way and to help you make decisions that could potentially affect your insurance coverage for the better or for the worse.

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