What is a fixed deductible?

A fixed deductible refers to a predetermined set amount that an insured individual must pay out-of-pocket before their insurance coverage begins to pay for a claim. This means that, in the event of a loss, the insured party must cover this specified amount first, which helps reduce the insurer's burden of small claims and encourages policyholders to take more care to avoid losses.

For instance, if a homeowner has a fixed deductible of $1,000 and experiences damages worth $5,000, they would be responsible for the first $1,000, and the insurance company would cover the remaining $4,000. Fixed deductibles provide clarity and predictability for both the insurer and the insured, as the amount is set at the outset of the policy and does not change based on the events of the claim.