What is a dollar deductible in insurance?

A dollar deductible in insurance refers to a fixed amount that the insured must pay out of pocket before the insurance coverage begins to pay for a claim. This deductible is expressed as a specific dollar figure, making it clear and straightforward for policyholders to understand their financial responsibility in the event of a loss.

When a policy includes a dollar deductible, the insured is responsible for that set dollar amount for each claim. For example, if a policy has a $500 deductible and a claim is made for $2,000, the insurance company would cover $1,500 after the insured pays the initial $500. This mechanism is important as it helps reduce the number of small claims made to insurance companies, which can keep overall premiums lower for policyholders.

The other options do not accurately capture the definition of a dollar deductible. While specific time frames and percentage deductibles are relevant concepts in insurance, they do not represent the fixed dollar amount structure that is characteristic of dollar deductibles.