The deductible clause is the contract term that sets the fixed amount an insured must pay before the insurer begins to pay a claim.
What the clause controls
Most contracts specify:
- whether the deductible is fixed or percentage-based,
- the trigger event (per occurrence, per claim, annual aggregate),
- and whether any minimum threshold must be met before co-payments or coinsurance apply.
Claims workflow impact
The clause directly affects how first-party and third-party claims are adjusted. If a claim is under the deductible:
- the claim is still valid,
- but member payment comes first from the insured, and
- the insurer’s liability starts once the threshold is reached.
Different products use different thresholds because this influences underwriting risk and premium assumptions.
Underwriting and pricing logic
A higher deductible usually means the policyholder keeps more risk and may pay a lower premium. Underwriters use this clause when modeling expected claim frequency and severity by product tier.