In the context of insurance, what does "deductible" refer to?

The term "deductible" in the context of insurance specifically refers to the amount that an insured individual must pay out-of-pocket before their insurance company will start to pay for a claim. This is a common feature in various types of insurance policies, including health, auto, and homeowners insurance.

When a claim is filed, the insured is required to cover the deductible amount first. Only after this amount has been paid will the insurance company contribute toward the remaining costs of the claim. For example, if a policyholder has a deductible of $1,000 and files a claim for $5,000, they will pay the first $1,000, and then the insurance company will cover the remaining $4,000, assuming the policy terms are met.

This mechanism helps to share the risks between the insurer and the insured, while also encouraging responsible use of insurance, as policyholders may be more mindful of small claims. The other choices refer to different concepts in insurance: a percentage of the claim relates to co-insurance, the maximum amount payable by the insurance company pertains to coverage limits, and the fixed monthly payment indicates the premium.