Deductible Clause

Updated: 09 June 2023

What Does Deductible Clause Mean?

A deductible clause is a clause in an insurance contract that states that the insured must pay a specific amount of money before the insurance policy will kick in to help pay for losses. Deductible clauses are used in a variety of insurance fields and also vary greatly in amounts.

Insuranceopedia Explains Deductible Clause

Deductible clauses are a way for policyholders to share some of the financial responsibility with their insurance companies. Usually, deductibles only represent a small fraction of the annual aggregate limit that an insurer will pay for a policy. For example, a health insurance policy may have a deductible clause of $4,000, and the annual aggregate limit of the policy for the insurer may be $100,000. Thus, even though deductible clauses result in policyholders being responsible for covering some for their insured expenses, this amount usually pales in comparison to what the insurer is responsible for.

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