Principles of Risk Management and Insurance, 13th Edition

Deductibles

A deductible is a common policy provision that requires the insured to pay part of the loss. A ­deductible is a provision by which a specified amount is subtracted from the total loss payment that otherwise would be payable. Deductibles typically are found in property, health, and auto insurance contracts. A deductible is not used in life insurance because the insured’s death is always a total loss, and a deductible would simply reduce the face amount of insurance. Also, a deductible generally is not used in personal liability insurance because the insurer must provide a legal defense, even for a small claim. The insurer wants to be involved from the first dollar of loss so as to minimize its ultimate liability for a claim. Also, ...