What is the term for the amount of loss that is paid by the policyholder in an insurance claim?

The term that refers to the amount of loss that is paid by the policyholder in an insurance claim is known as the deductible. A deductible is essentially the portion of the claim that the insured party is responsible for before the insurance company starts to pay for the remaining costs. It serves as a form of risk-sharing between the policyholder and the insurer, helping to manage insurance costs.

In most insurance policies, there is a specified deductible amount that must be met before the insurance coverage kicks in. For example, if a person has a $1,000 deductible and files a claim for $5,000 in damages, they would be responsible for the first $1,000, and the insurance company would then cover the remaining $4,000.

Other terms mentioned do not describe this concept accurately. The premium refers to the payment made for the insurance policy itself, co-payment typically relates to health insurance and is the fixed amount paid by the insured at the time of a service, and coverage limit refers to the maximum amount an insurer will pay for a covered loss. Therefore, the deductible is the best term to describe the amount the policyholder must pay out of pocket for a claim.