Answer
A – Deductibles –Amount of money that an Insured must pay from his pocket before the Insurance coverage is claimed. These are mentioned on the policy itself. They can vary depending on the terms of Insurance and type of coverage.
Deductibles help Insurers manage risk by shifting financial responsibility of smaller claim items on the Insured. It also encourages the Insured to take measures to prevent losses and minimize the frequency and severity of claims.
Types-
1.Compulsory deductibles- Decided by Underwriter, to encourage Insured to keep due care of the subject matter.
2.Voluntary deductible- Decided by Insured, to reduce premium and risk becomes higher.
3.Fixed deductible – a fixed amount decided at the time of buying a policy.
4.Percentage deductible- decided percentage between insured and insurer
5.Annual Aggregate deductible AAD – you can have a number of claims in a year, but the deductibles are decided. E.g -10000 USD deductibles allowed for a multiple claims for the whole year.
Under H & M-
1.Standard deductible- standard for each particular average claim.
2.Machinery damage deductible- It applies in addition to the standard deductible.
3.Separate deductibles for third party liability.
4.NO deductibles for Total loss.