Which term refers to the amount the insured must pay out of pocket before the insurer covers a claim?

The term that refers to the amount the insured must pay out of pocket before the insurer covers a claim is known as a deductible. The deductible is a fixed dollar amount specified in an insurance policy. It represents the portion of a loss that the insured is responsible for before the insurance provider will begin to pay for covered losses. This concept helps to mitigate premium costs by ensuring that the insured is partially responsible for the losses they incur, which can discourage unnecessary claims.

In insurance practice, the deductible can vary among different types of policies and can be applied per claim or annually, depending on the specifics of the coverage. Understanding the role of a deductible is crucial for policyholders as it affects both the premium they pay and their financial responsibility when filing a claim.

The other terms provided have different meanings: the premium is the amount paid for the insurance coverage, the excess is a term often synonymous with deductible but can have different applications in certain contexts, and a co-pay pertains to a specific amount paid for certain healthcare services under health insurance plans, not general insurance claims.