ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A deductible is the amount of money that you are responsible for paying toward an insured loss. When a disaster strikes your home or you have a car accident, the deductible is subtracted, or “deducted, ” from what your insurance pays toward a claim.

Detailed explanation-2: -A deductible is the amount you must pay before the insurance company pays anything on a claim. You usually pay a lower premium if you choose a higher deductible. Example: Let’s say that your Comprehensive coverage has a $500 deductible. If a storm causes $1, 500 of damage to your car, you must pay the first $500.

Detailed explanation-3: -Aggregate Limit-The maximum dollar amount of damages that the insurer will pay under the insurance contract, during the coverage period regardless of the number of claims for a particular coverage.

Detailed explanation-4: -The essential insurance model involves pooling risk from individual payers and redistributing it across a larger portfolio. Most insurance companies generate revenue in two ways: Charging premiums in exchange for insurance coverage, then reinvesting those premiums into other interest-generating assets.