What is the deductible?
The deductible is a recurring term within auto insurance and other types of policies, such as health insurance. But do you know exactly what it is? What are the characteristics of the deductible? And why is it very important to try to understand what its impacts are within the insurance contract we are entering into?
Deductible meaning: what does it mean?
Let’s start immediately by emphasizing that the term deductible means that part of the reimbursement of a claim remains the responsibility of the insured party.
It follows that not all the damage suffered can be subject to compensation and that a part of this will therefore not be reimbursed by your insurance company. It also follows that, intuitively, the larger the deductible, the less the insurance company will intervene in the compensation of the damage. And that, on the other hand, the lower the deductible, the greater the compensation we could get from our insurance company.
For example, in the case of an RCA policy, the deductible on car insurance is that part of the damage under which the insurance company does not recognize any indemnity or reimbursement to the insured person.
Assuming that the deductible is – for example – 500 euros, it follows that damage of 400 euros will not be reimbursed by our policy and that damage of 700 euros will be reimbursed only in the amount of 200 euros (absolute deductible) or 700 euro (relative deductible). Clear, right?
Insurance deductible: relative or absolute?
In-car insurance contracts, as well as in other non-RCA policies, there are two different types of deductible, absolute or relative. But what do they mean? What are the differences between the two forms?
In reality, the meaning of deductible does not change, but the method of its calculation changes.
In the case of the relative deductible, in fact, the insurance company will indicate a sum below which the insured person will not be entitled to any reimbursement. If, on the other hand, the damage is greater than the established sum, or the deductible, the reimbursement will be full.
Let’s take another example!
Let’s imagine that you have signed an insurance contract with a deductible of 1,000 euros. In this case, damages equal to 900 euros will not give rise to any compensation, while damages equal to 1,100 euros will result in full compensation, for the entire damage, equal – in this case – to 1,110 euros.
At this point, it should be clear to understand what the absolute deductible is which, on the other hand, provides for a partial reimbursement in the event that the damage exceeds the threshold established by the insurance company.
Also in this case it is useful to give a small example.
Let us, therefore, resume the hypothesis of an insurance contract with a deductible of 1,000 euros. in this case, damage equal to 900 euros will not result in any type of compensation, while damage equal to 1,100 euros will result in compensation for the difference between the deductible and the damage, or for 100 euros.
Car insurance deductible
The deductible is also a recurring clause in auto insurance. The inclusion of this clause in one’s contract, however, can result in an immediate advantage, with consequent savings on the insured premium. On the other hand, for the insurance company, there will be the obvious bonus of being able to avoid having to deal with practices for small compensation (such as those that do not exceed the deductible) and therefore will be well prepared to grant a discount on the insurance premium to its customer. .
Furthermore, even in the case of damages exceeding the deductible, the insurance company can still save (in the case of absolute excess) a part of the compensation. Another good reason to be able to share this benefit with your customer!
Health insurance deductible
However, the deductible can also be found in other policies, such as health insurance. The mechanism is the same!
In the case of a relative deductible on health insurance, the damage will be reimbursed in full only if its economic value exceeds the excess threshold established by the insurance company, while in the case of the absolute deductible on health insurance, the damage will be partially reimbursed when – obviously – the economic value exceeds the deductible threshold established by the insurance company.
Also, take into account that it is possible that in the health insurance contract the deductible is calculated NOT on the economic value of the damage suffered, but on the percentage of disability suffered!
Travel insurance deductible
The same process will also take place with other insurance formulas. For example, the travel insurance deductible is very common, i.e. the deductible in those policies that protect the traveler against a series of inconveniences that could occur during transfers in Italy or abroad, for work or personal reasons.
In all these situations, the customer of the insurance company will be able to obtain full or partial compensation for the damage only if it exceeds the level of the deductible. Under it, however, he will not be able to obtain any reimbursement of the injury suffered.