What is an insurance deductible?

An insurance deductible is the amount of money that you, the policyholder, will have to pay out-of-pocket before the insurance company will start to cover the cost of the claim. In New Hampshire, when you purchase insurance you will need to choose the amount of your deductible. Generally, the higher the deductible you choose, the lower your premiums will be. If you file a claim, then you will need to pay out-of-pocket up to the deductible amount you have chosen. There is usually a minimum deductible you can select, but you can also choose a higher deductible to reduce your premiums. After you have paid out the deductible amount the insurance company will start to cover the remaining amount of the claim up to the limits of your insurance policy. For example, if you have a $500 insurance deductible and you have a claim that is for $2,000, then you would need to first pay the $500. The insurance company would then cover the remaining $1,500 of the claim. It is important to understand the deductible amount that you have chosen before you purchase your policy. Depending on your personal situation, you may want to choose a higher deductible in order to reduce your overall premiums. However, make sure you can afford the deductible should you need to make a claim.

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