Alberta General Insurance Level 1 Practice Exam

A deductible in insurance policies is defined as the amount the insured must pay out-of-pocket before the insurance coverage begins to cover the remaining costs. This means that when a claim is made, the insured is responsible for paying up to the deductible amount, and only after that does the insurer contribute toward the remaining eligible expenses.

This concept helps to ensure that policyholders share a portion of the costs of claims, which can encourage responsible behavior and reduce the number of small claims made. Furthermore, having a deductible can lower the overall premium of the insurance policy, as the insured takes on part of the financial risk.

The other choices describe different aspects of insurance but do not accurately capture the definition of a deductible. For instance, the first option refers to what is paid to the insurer, the second option relates to maximum coverage limits, and the fourth option describes the policy's total value rather than addressing out-of-pocket expenses.