Deductible

The amount you pay out of pocket before insurance starts covering a loss.

A deductible is your share of a loss before the insurer pays anything: with a $1,000 auto deductible, a $4,000 repair costs you $1,000 and the insurer $3,000. Higher deductibles mean lower premiums, since you're absorbing the small claims yourself — often sensible, because frequent small claims can raise your rates anyway. The word also appears in taxes, where a deductible expense is one that reduces taxable income; context tells you which meaning is in play.

She raised her deductible from $500 to $2,000 and cut her annual premium by nearly a third.