What is the term for the amount you must pay out-of-pocket before insurance starts paying? It is the deductible.
A deductible is the portion of a covered loss that the policyholder must pay before the insurer contributes. If a policy has a $1,000 deductible and a covered claim costs $5,000, the insurer generally considers the remaining $4,000, subject to the policy’s coverage limits and conditions.
Deductibles work differently across policies. Auto and homeowners insurance often apply a deductible to each covered incident, while health-insurance deductibles commonly reset annually. Some health plans also pay for particular services before the deductible is met.
A deductible is not the same as a premium, which is the price paid to keep coverage active. It is also different from a copay, a fixed payment for a covered service, and an out-of-pocket maximum, the most a policyholder generally pays for covered services during a plan period.