What does a deductible refer to in an insurance policy?

A deductible is a specified amount that the insured must pay out of pocket before the insurance company will pay for any covered expenses related to a claim. This concept is fundamental in insurance as it is a way for the insurer to share the risk with the insured. When a claim is filed, the deductible is subtracted from the total claim amount, and the insurer pays the remaining balance. This means that the insured is responsible for a portion of the costs, which can help to minimize the number of small claims and maintain lower premium costs.

In contrast, the other options don't accurately capture the meaning of a deductible. For instance, a fixed percentage of the claim refers more to co-insurance or co-payments rather than a deductible, which is a specific amount paid by the insured. The total amount insured relates to the policy limit but does not involve the insured's payment before claims are covered. Lastly, additional payments for coverage pertain to endorsements or riders in a policy, not to the deductible itself. Therefore, defining a deductible as the specified amount the insured must pay before a claim is settled accurately reflects this key insurance principle.