What Does a $100 Deductible Mean?

Understanding the Deductible Concept

Insurance policies often contain specialized terms that can be confusing for policyholders. Among these terms, the deductible stands out as a fundamental component affecting how and when insurance coverage applies.

A deductible represents the initial amount of money a policyholder is responsible for paying out-of-pocket before their insurance company begins to cover eligible costs. This mechanism serves as a form of cost-sharing between the insurer and the insured, which can also help discourage the filing of very small claims that might otherwise be fully covered. Deductibles are a standard feature across many forms of insurance, including health, auto, and home insurance policies.

Applying the $100 Deductible

A $100 deductible means the policyholder must pay the first $100 of covered expenses for a claim before the insurance company contributes financially. For instance, if a policyholder has an auto insurance policy with a $100 deductible and incurs $300 in covered repair costs from an accident, they would pay the initial $100, and the insurance company would then cover the remaining $200.

In another scenario, consider a health insurance plan with a $100 deductible. If an individual has a doctor’s visit costing $250, they would first pay the $100 deductible. The insurance would then begin to pay its share of the remaining $150, based on the policy’s specific terms.

The application of a $100 deductible can vary based on whether it is per-incident or annual. A per-incident deductible, common in auto insurance, means the $100 applies to each separate claim event. If a policyholder has two separate car accidents in a year, they would pay the $100 deductible for each incident. Conversely, an annual deductible, often found in health insurance, means the $100 only needs to be met once within a policy year, regardless of the number of eligible claims.

Your Costs After the Deductible

Once the $100 deductible has been fully paid by the policyholder, the insurance company will then commence covering eligible costs as outlined in the policy terms. This means that for any subsequent covered expenses within the same claim or policy period, the insurer will begin to contribute their agreed-upon share. The payment of the deductible marks the point at which the insurer’s financial responsibility for covered services activates.

It is important to understand that meeting the deductible does not always mean all subsequent costs are fully covered by the insurer. Policyholders might still be responsible for additional out-of-pocket costs, such as co-payments or coinsurance, depending on the specific structure of their insurance plan. A co-payment is a fixed amount paid for a specific service, while coinsurance is a percentage of the cost of a covered service after the deductible has been met. The insurance company then pays the remainder of the covered amount, up to any specified policy limits.