What does "deductible" refer to in an insurance policy?

In an insurance policy, a deductible refers to the specific amount that a policyholder is required to pay out of pocket before the insurance company begins to cover any claims. This means that if an insured individual incurs a loss or medical expense, they must first pay the deductible amount, and only after that will the insurer start to provide coverage for the remaining costs according to the terms of the policy.

Deductibles are a common feature in many types of insurance, including health, auto, and home insurance, and they serve to reduce the amount of small claims that insurance companies have to process. By requiring the policyholder to pay a portion of the expenses upfront, deductibles encourage more responsible use of insurance and help to lower overall premium costs for all policyholders.

In this context, the other options do not accurately represent the concept of a deductible. The total cost of premiums relates to the amount paid for the policy itself, the percentage of claims paid by the insurer involves co-insurance, and the maximum payout pertains to policy limits rather than a deductible. Each of these aspects plays a role in insurance policies but does not define what a deductible is.