What is a Deductible? - Insurance Navy. A deductible is the out-of-pocket cost the insured is responsible for before the insurance company pays a claim. The deductible is typically stated in the terms of an insurance policy and is used to deter large volumes of minor claims. For example, if a policy has a $500 deductible amount, the policyholder must pay the first $500 upfront costs. If the total claim is $2,000, the insurance company would then pay $1,500. The policyholder’s financial responsibility may be a percentage of the insurance claim or a specified dollar amount. Deductibles can apply per policy or claim, depending on the insurer and the type of policy. Policies with high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims.
In health insurance, a deductible is the expenses that must be paid out of pocket before an insurer will pay any expenses.