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What's the difference between a deductible and an out-of-pocket max?
I see both of these listed on my insurance policies and I don't understand what the difference is. I know I have to pay a deductible, but wouldn't that be my out-of-pocket maximum?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“While deductibles and out-of-pocket maximums seem similar, they are used differently across insurance policies.
In
car insurance
, deductibles and out-of-pocket maximums are considered forms of risk retention and are used interchangeably. This means that you are responsible for part of the cost when you submit a claim. Companies use them to reduce the number of claims that people submit and manage the cost of insurance rates.For car insurance, your deductible is the out of pocket maximum that you pay for each claim. However, there is no maximum for the life of your policy. This means that there is no cap on how much you pay when submitting claims.
In other types of insurance, your deductible is what you pay for each claim. However, there is a limit for how much you pay over the life of the policy. If your out of pocket maximum is $4,000 and you pay your deductible or amounts out of pocket totaling that, you aren’t required to pay anything else even if you submit future claims within the policy lifespan.
If you want to get the best rate on your car insurance and related deductible, you should also check out
Jerry
. Sign up today to compare rates from top insurance carriers.”View full answer
- Gregory R.
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