A deductible defines part of a covered loss you retain
A deductible is an amount the policyholder must bear under an insurance contract before the insurer pays the remaining covered amount. With a ₹5,000 per-claim deductible, a covered ₹20,000 loss would lead to a ₹15,000 insurer payment in a simple example without other limits or conditions.
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Split the loss before calculating payment
A deductible changes how a covered loss is shared. It does not necessarily change the size of the loss itself.
Suppose a policy has a ₹5,000 deductible for each claim. For a covered ₹20,000 loss, the policyholder bears ₹5,000 and the insurer pays ₹15,000, assuming no other restrictions apply. A covered loss of ₹3,000 would produce no insurer payment under that simple arrangement.
The contract's calculation basis matters. A deductible may apply per claim, across a year or under another defined structure. Policies can also include exclusions, payment caps and separate cost-sharing rules.
A quoted coverage amount therefore cannot, on its own, reveal the payment for a particular event. The deductible is one of the terms needed to work out that payment.