Deductible

Insurance policies cover a specific amount of damages minus an amount for which the policy holder is responsible. That amount is called the "deductible." A policy's premium and its deductible share a symbiotic relationship. The higher the deductible, the lower the premium or monthly payment schedule on the policy. The deductible then, is a representation of the degree to which a homeowner can be personally financially responsible for damage to their property. When the deductible has been paid or "met," the homeowner's policy then kicks in and covers the remainder of the damage as specified under the terms of the insurance policy.

Individuals and insurance providers routinely negotiate the amount of the deductible, which is appended to the policy as a fixed amount. Many factors will affect the amount of deductible an individual can bear, including their current economic standing and the likelihood that damaging events will occur to their homes.

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