Deductible

A deductible is the amount of loss that the insured must bear before the insurer pays, as agreed in the insurance policy. In foreign trade, it is common in cargo transportation insurance (e.g., marine all risks, air freight insurance) and product liability insurance. When a covered loss occurs, the insurer only pays the portion exceeding the deductible, or pays according to an agreed ratio. Usage scenarios include: negotiating the deductible level with the insurer to adjust premiums when taking out insurance; calculating the claim amount after a loss. Notes: A deductible is different from a franchise; the former is an absolute deductible, while the latter is a relative deductible (if the loss exceeds the franchise, the full amount is paid). Deductibles can be per-occurrence or cumulative. The insured should accurately understand the deductible clause to avoid being unable to claim for small losses. It is similar to an excess, but a deductible emphasizes the portion borne by the insured. In foreign trade contracts, the party bearing the deductible for insurance claims should be clearly specified, usually agreed by the buyer or seller according to trade terms (e.g., under CIF, the seller insures).