The term 'deductible' applies to that portion of a claim that will not be paid by the insurance company
'DEDUCTIBLES' is a term that appears in many medical insurance policies. In some insurance policies, it appears as 'excess'. Deductible is the portion of any claim lodged that is not payable by the insurance company.
For example, you may have seen an overseas travel insurance policy that states that in case of loss of passport the insured will get $500, subject to deductible of $50. If the policyholder's passport is lost and loss assessment process conducted by insurer arrives at a loss of $250, the insurer will pay $200. Put simply, the maximum an insurer will pay for a loss of passport is $500, provided the policyholder pays the first $50 towards the loss.
In a typical general insurance policy insuring car, home, health or overseas travel, a deductible clause will be applicable to claims arising from damage to or the loss suffered by the policyholder. Irrespective of the cause and with no bearing on whether the policyholder is responsible for such loss, the deductible clause applies. Higher the amount of deductible, lower the premium. Third party covers, however, do not have the deductible clause. They offer protection to the policyholder up to the sum assured for the harm or loss he causes to a person other than himself.
For example, a person is held liable to pay for the loss caused by him if dashes another person's car. An individual who suffers from an accident or a wrongful act of others, typically has a mindset to recover any loss, no matter how small it is. This is why there is no deductible clause in third party covers.
