Skip to content
BeaconLearn. Grow. Thrive.
Start free
Financial Protection

Deductible

Also called: insurance deductible

A deductible is the amount you pay toward a covered loss or covered care before your insurance starts paying. On home or renters insurance it generally applies to each claim; on a health plan it usually applies over a coverage period, often a year.

By · Updated

How it works

On a home or renters policy, the deductible generally comes off each covered claim, and a covered loss smaller than the deductible is yours to pay in full. Some homeowners deductibles are a percentage of the home’s insured value rather than a flat dollar amount, and some coastal policies use separate percentage deductibles for wind damage. A 2% deductible on a home insured for $300,000 is $6,000.

Health plans work on a coverage period, usually one year. Until your spending on covered care reaches the deductible, the plan generally does not start paying for services that are subject to it. After that, you may still pay coinsurance, a percentage of the allowed amount for a service, or copayments, which are fixed amounts usually due when you receive care.

A higher deductible often comes with a lower premium, trading a smaller recurring bill for a larger possible cost when something goes wrong. Before choosing a higher deductible, it can help to confirm that the full amount would be available from savings on short notice, since a loss can happen at any time and may bring other expenses with it.

Related terms

Sources and further reading

Examples are illustrative and focus on U.S. personal finance. This page is educational, not individual financial, investment, tax, or legal advice. Read our editorial approach or report a correction.

Keep learning

See every term in the money glossary