Will you see a difference between the actual value of a loss and the relevant claim payment if there is a deductible?

When a deductible is applied to a claim, it signifies the amount that the policyholder is responsible for covering out of pocket before the insurance coverage kicks in. Thus, if there is a loss, the actual value of that loss may be higher than the payment amount received from the insurance company, since the deductible is subtracted from the total loss amount when calculating the claim payment.

For example, if there is a loss valued at $10,000 and the policy has a deductible of $1,000, the claim payment made by the insurance company would only be $9,000. This creates a clear difference between the actual value of the loss and the amount paid out under the claim due to the presence of the deductible. The statement highlights a fundamental aspect of how deductibles function within insurance policies and stresses the importance of understanding this concept when assessing coverage and potential payouts.