Definition
The deductible is what you pay out-of-pocket before insurance covers damage. Higher deductibles reduce premiums but increase risk.
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Deductibles typically range $500-$2,500. Higher deductibles reduce premiums. Deductible applies per claim.
Pro Tip
Balance deductibles with emergency fund capacity. Higher deductibles save premiums but increase financial risk.
Example
Homeowners insurance with $1,000 deductible covering $350,000 home.