What does the term "deductible" refer to?

The term "deductible" refers to the specific amount that a policyholder is required to pay out-of-pocket before their insurance coverage kicks in for a claim. This means that when a loss occurs, the insured would need to cover the deductible amount first, and only then would the insurance company be responsible for covering the remaining costs associated with the claim. Deductibles serve as a way for insurance companies to manage risk and ensure that policyholders share in the financial responsibility of claims, which can help reduce the overall number of claims filed.

The other options describe different aspects of insurance policies. The total amount of the insurance policy premium relates to the cost of purchasing the insurance itself, not the deductible. The maximum amount an insurance company will pay for a claim pertains to the policy limits and not to the portion the policyholder must initially cover. The amount a company charges for filing a claim is not related to the deductible but rather to administrative or processing fees, which are distinct from the financial responsibility of the policyholder.