The amount you pay out-of-pocket before insurance coverage begins.
A deductible is the amount you may want to pay yourself before an insurance policy begins to cover costs. For example, a health insurance plan with a $1,500 deductible means you pay the first $1,500 of medical expenses; insurance then covers eligible expenses above that. Auto insurance, home insurance, and health insurance typically have deductibles. Higher deductibles lower premiums; lower deductibles raise premiums. Choosing the right deductible involves balancing lower premiums against higher out-of-pocket costs. Most financial advisors recommend choosing deductibles you can afford if a claim occurs.