Deductibles in car insurance

Let’s say the collision coverage on your car insurance policy has a $500 deductible. You damage your car in a covered accident. It costs $3,000 to repair. You’d pay $500 toward repairs, and your insurer would cover the remaining $2,500.

Unlike health insurance, which typically has one deductible to meet each year, the deductible on an auto insurance policy’s coverage will apply each time you file a claim.

Deductibles in home insurance

Deductibles in home insurance works virtually the same as with car insurance. You pay an initial deductible before coverage pays for the rest. Say you have a $1,000 deductible. A hailstorm damages your roof. You’d first pay your $1,000 deductible before homeowners coverage kicks in.

It’s important to note that, as with auto insurance, the higher your deductible is, the lower your insurance premium is likely to be. A lower deductible means you pay less during a claim but more for your premium.

Deductibles in health insurance

Health insurance deductibles work differently than auto and home insurance. Where auto and homeowners deductibles apply to each claim, there is only one health insurance deductible, each year.

For example, let's say your health insurance has a $500 deductible. This means you need to pay the first $500 of your medical bills before your insurance starts pitching in.

Then, once you’ve paid off your deductible, you may have coinsurance and a copay with each claim moving forward, depending on your specific policy.

What is coinsurance?

Coinsurance is the percentage of the bill you still have to pay after you’ve reached your deductible, but before you’ve reached your policy’s out-of-pocket maximum, according to Forbes. Typically, coinsurance is between 20% and 40%, depending on your health insurance policy. For example, if your coinsurance is 20%, you pay 20% of the bill and your insurance covers the other 80%.

What is a copay?

A copayment – or copay – is what you pay the actual medical professional, such as a pharmacist, doctor, physician’s assistant, etc., but not your health insurance company. Copays are typically lower when seeing your primary care physician versus a specialist, says Forbes. That’s because specialist care is often more expensive.