Rhode Island Insurance Adjuster Exam 2025 – Complete Study Guide

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What does "deductible" mean in an insurance policy?

The total amount of coverage provided

The price of an insurance policy

The out-of-pocket amount before insurance pays

The term "deductible" in an insurance policy refers to the specific out-of-pocket amount that a policyholder must pay before an insurer will cover the remaining costs of a claim. This means that when a claim arises, the insured is responsible for paying the deductible amount themselves, and the insurance company will only begin to cover costs that exceed this amount. For example, if a policy includes a deductible of $1,000 and a covered loss amounts to $5,000, the insured would pay the first $1,000, and the insurance would cover the remaining $4,000. Understanding deductibles is crucial for policyholders as it impacts their out-of-pocket expenses when filing claims and influences their choice of policy based on how much risk they are willing to retain.

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The maximum payout limit of a policy

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