Glossary
Deductible
The amount an insured pays out of pocket on a covered claim before the insurer's obligation begins.
Deductibles align the insured's interest with the carrier's and keep small claims out of the system. Raising one lowers premium; lowering it raises premium.
Because premium moves with the deductible, a mid-term change is an endorsement that adjusts premium and therefore commission. Deductible changes are a routine source of the small off-cycle commission lines that turn up on statements.
See also
- Endorsement — A document that amends an in-force policy — changing coverage, limits, insured property, or named parties — usually with…
- Claims Reserve — The amount an insurer sets aside as its estimate of what an open claim will ultimately cost.
- Gross Premium — The total amount charged for a policy before deducting commission, and generally before taxes and fees are separated out…