What is a deductible for insurance?

Deductibles in insurance refer to costs that you must pay every year before your insurance can start covering the costs. Insurance deductibles are associated mostly with property, casualty and health insurance products. 

Deductibles are a way for insurance companies to ensure that they can compensate for certain losses. Essentially, deductibles enable insurance companies to share the burden of their losses along with their customers. Deductibles can either be a fixed amount of money or a percentage of the amount of your insurance. Therefore, if you have homeowner’s insurance with a $500 deductible, it would mean that you would have to pay $500 first before the insurance company can start paying for any of the damages. Due to this, insurance policies with lower deductibles tend to be more expensive. 

Deductibles in Healthcare Insurance

Although deductibles are a big aspect of healthcare insurance, it is important to understand that there are other significant costs involved as well. More specifically, there are two aspects, apart from your deductible, that need to be taken into account:

• Copays - copays are fixed amounts that are required to be paid by the policyholder for specific healthcare expenses. Copays and deductibles are almost always independent of one another, and therefore, you don't need to meet your deductible first in order to pay your copay.  
• Coinsurance - unlike copays, you can only pay your coinsurance once you have paid all of your deductibles first. Coinsurance only covers a portion of your costs, after which your insurance policy will kick in.