A deductible is the amount of money a policyholder must pay out of pocket on a covered loss before the insurance company starts paying its share.

For example, if a car insurance policy has a $1,000 deductible and crash repairs cost $4,500, the insurer usually pays $3,500 and the policyholder covers the first $1,000. The same idea often appears in health, homeowners, and some business policies, but the details can change. Some deductibles apply per claim, others per year, and some are split by type of loss. That is where insurers slip in surprises: a lower monthly premium often means a higher deductible, and a separate wind, flood, or collision deductible can leave a family owing far more than expected after a disaster or accident.

For an injury claim, the key trap is that a deductible does not usually reduce what an at-fault party owes in a personal injury case, but it can affect how quickly someone gets treatment, repairs a vehicle, or replaces damaged property. After a crash or workplace-related incident, people sometimes pay deductibles upfront just to keep life moving, then seek repayment through settlement, subrogation, or a property damage claim.

In Vermont, deductibles can matter sharply after storm losses like the flooding tied to Tropical Storm Irene in 2011, when homeowners learned that standard policies and separate flood coverage do not work the same way. Always check the declarations page, not just the insurer's summary.