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What Is Deductible In Insurance

This article is provided to you independently of any insurance broker, insurer, or any insurance lobbyist. We believe in democratizing knowledge to our readers through a complete independent lens. For more learning around commercial insurance and risk management, visit our classroom.

What Is Deductible In Insurance

A deductible in insurance is the amount that has to be paid by the person or entity buying the insurance in the event of a covered loss. For example, let's say Party A has insurance for a limit of $1,000,000 with a deductible of $10,000. If a loss happens to Party A and it is covered by the insurance policy they bought, then the insurance company will pay the amount of the loss, up to the limit of insurance, MINUS the amount of the insurance deductible. Let's say Party A's covered loss was $500,000 then the insurance company would ultimately pay $490,000 (which is $500,000 - $10,000).

FAQ

Is the deductible in insurance negotiable?

Yes. It is best you have several insurance brokers compete for your business in order for you to have best negotiation outcomes including for any type of deductible in insurance.

Is the deductible in insurance a fixed amount?

Yes in most cases however it can also be shown as a percentage of the limit of the insurance or other limit as described within the insurance policy.

What Is Deductible in insurance for D&O?

It depends and it can change from one insurer to another. Small businesses as well as non for profits can have deductibles as little as $1,000 or $500 on specific D&O coverage. Deductibles in insurance for multinationals can be in the 8 or 9 figure range (> $10,000,000).

Can the Deductible in insurance be $0?

Yes.

What amount should the Deductible in insurance be?

The person or entity buying the insurance should negotiate a deductible that is equivalent to an amount they are comfortable paying in cash immediately.

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