Discover the Surprising Trick to Maximizing Coverage – An Insurance Deductible is… EverFi
Ivan Larsen 
I’ve been asked many times about insurance deductibles and what they mean. So, in this article, I’ll be diving into the world of insurance deductibles and explaining what they are and how they work. Whether you’re a first-time insurance buyer or someone who’s had insurance for years, understanding deductibles is crucial in making informed decisions about your coverage.
If you’re not familiar with the term, an insurance deductible is the amount of money you have to pay out of pocket before your insurance coverage kicks in. It’s essentially your share of the cost for any covered claim. Deductibles can vary depending on the type of insurance policy you have, such as auto, home, or health insurance. Understanding how deductibles work can help you determine the right coverage for your needs and budget.
An Insurance Deductible is… EverFi
When it comes to insurance, understanding deductibles is crucial. An insurance deductible is the amount of money that you, as the policyholder, must pay out of pocket before your insurance coverage kicks in. It’s important to note that an insurance deductible is not a fixed amount but rather a percentage or a set dollar amount.
EverFi defines an insurance deductible as the initial amount that you must pay before your insurance company starts covering the costs. This applies to various types of insurance, including health insurance, auto insurance, and homeowner’s insurance.
The purpose of an insurance deductible is to share the risk between you and the insurance company. By requiring you to pay a deductible, the insurance company is incentivizing you to take responsibility for a portion of the expenses. In return, they will cover the remaining costs up to the policy limit.
Understanding how deductibles work is essential in making informed decisions about insurance coverage. It’s important to find a balance between a deductible that is affordable and fits within your budget, while also considering the impact it has on your insurance premiums.
Types of Insurance Deductibles
Flat Deductible
A flat deductible is a set dollar amount that the policyholder must pay out of pocket before the insurance coverage kicks in. For example, if you have a flat deductible of $500 and you make a claim for $2,000, you will need to pay the first $500, and then the insurance company will cover the remaining $1,500.
Flat deductibles are common in auto insurance policies, where a fixed amount is specified for collision or comprehensive claims. They provide a clear and straightforward understanding of the out-of-pocket expense for the policyholder.
Percentage Deductible
A percentage deductible is calculated based on a percentage of the total claim amount. For instance, if you have a 10% deductible and you make a claim for $5,000, you would be responsible for paying $500 (10% of $5,000) before the insurance coverage takes effect.
Percentage deductibles are often found in homeowner’s insurance policies, especially for claims related to natural disasters or catastrophic events. The percentage deductible can vary depending on the type of claim, such as windstorm, earthquake, or flood.
Split Deductible
A split deductible is a combination of a flat and percentage deductible. It involves two separate deductibles – one fixed amount and one calculated as a percentage of the claim.
For example, if you have a split deductible of $500 plus 10%, and you make a claim for $4,000, you would need to pay $500 (the fixed amount) plus $350 (10% of $3,500, which is the remaining amount after subtracting the fixed amount).
Split deductibles are commonly used in health insurance policies, where there is a fixed amount deductible for certain services, and a percentage deductible for other services. This allows policyholders to have a clear understanding of their out-of-pocket costs for different types of medical expenses.
Understanding the different types of insurance deductibles can help you make informed decisions when choosing insurance coverage. Whether it’s a flat deductible, a percentage deductible, or a split deductible, it’s important to consider your personal financial situation and choose a deductible that aligns with your budget and risk tolerance. Keep in mind that higher deductibles often lead to lower insurance premiums, but you should find a balance that provides adequate coverage while remaining affordable.
Remember, there is no one-size-fits-all answer when it comes to choosing an insurance deductible. It ultimately depends on your individual circumstances and priorities. Take the time to carefully evaluate these factors and make an informed decision that best suits your needs.
