What is a straight deductible in insurance?

A straight deductible refers to a specified dollar amount that is subtracted from a loss or the payable amount of an insurance claim. This means that when a policyholder incurs a loss, the insurer will only pay for the amount that exceeds the designated deductible. For instance, if a policy has a straight deductible of $500 and the total loss is assessed at $2,000, the insurer would only cover $1,500, as the first $500 has to be borne by the insured.

This mechanism encourages insured parties to take some level of financial responsibility for smaller claims, helping to keep insurance costs manageable. The amount specified is clearly defined in the insurance policy, providing clarity and a straightforward method for both the insurer and the policyholder in understanding their financial responsibilities when a claim is made.

In contrast, other options either encompass different concepts within insurance or introduce elements that do not accurately represent the definition of a straight deductible. A straight deductible strictly involves a fixed dollar amount rather than percentages or other conditions associated with claim handling or costs.