Claims Adjuster Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

In insurance terminology, a "deductible" refers to the specific amount of money an insured individual must pay out-of-pocket toward a claim before their insurance coverage begins to pay. This means that when a claim is made, the insurer does not cover the entire amount; instead, the insured is responsible for covering the deductible first. Once this out-of-pocket expense is met, the insurer will then pay for the remaining eligible expenses up to the policy limits.

Understanding deductibles is important in managing insurance policies because they directly affect premiums and the insured's overall out-of-pocket costs during claims. Higher deductibles often lead to lower premium costs, while lower deductibles may result in higher premiums. This mechanism encourages policyholders to take some responsibility for minor losses and can help reduce the frequency of small claims submitted to insurance providers.