Deductible

is a certain part of insured’s loss, not subject to reimbursement by an insurer in accordance with insurance terms and conditions. Deductible may be set in the form of a certain percentage of value of insured property or in a certain amount. It is understood that depending on how it is agreed, deductible may be applied both to total value of insured property and to individual points of cargo. Conditional (non-deductible, threshold) and unconditional (deductible) deductibles are distinguished, which are set in percentage or absolute value to an insurance amount. In case of conditional deductible, an insurer is released from liability for loss if its amount does not exceed amount of deductible, and loss is subject to compensation in full amount if its amount exceeds a deductible. In case of unconditional deductible, insurer’s liability is determined by loss amount minus deductible. Deductible is a form of insurer’s own participation in loss coverage and as a rule, is used for those cases when insured’s loss is relatively small. Introduction of a deductible into an insurance agreement is intended to exempt an insurer from costs associated with elimination of minor loss, since in many cases such expenses exceed the amount of loss. In addition, deductible requires an insured to treat insured property more diligently.