A deductible is the amount you pay out of pocket on a covered claim before your insurance pays the rest. Higher deductibles usually mean lower premiums and vice versa. With a $1,000 deductible, a $7,500 hailstorm claim pays you $6,500. Bumping the deductible to $2,500 typically cuts the premium by 10 to 20 percent. See the full definition with examples on our Insurance Terms page at /insurance-terms.

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