What is an insurance deductible?

An insurance deductible is a set amount of money that the policyholder is required to pay out of pocket before their insurance will cover the rest of the cost. In North Carolina, the amount of the deductible varies depending on the type of policy the person has, the amount of coverage they have, and the insurer they have chosen. The purpose of a deductible is to help contain costs for both the policyholder and the insurance company. Insurers understand that their customers are more likely to use their policy if the costs are lower. By setting a deductible, they can ensure that policyholders are only paying for the coverage they need. On the other hand, policyholders are able to keep their premiums low by choosing a higher deductible, since insurers will generally offer discounts on higher deductibles. If a policyholder needs to make an insurance claim, their deductible amount will be subtracted from the total cost of the claim before their insurance company pays out the remaining balance. For example, if a policyholder has a $500 deductible and their claim is for $3000, the insurance company would pay out $2500 after the deductible is subtracted. It is important to understand your insurance deductible, as it will determine what amount you will have to pay out of pocket for claims. Knowing this information ahead of time can help you better plan for unexpected costs.

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