deductible
A deductible is the amount you pay yourself before your insurance pays anything, and choosing it well is how you cut your premium.
In plain English
Insurance rarely pays from the first naira. The deductible, sometimes called the excess, is the portion you must cover yourself before the insurer contributes anything at all.
If your policy has a ₦100,000 deductible and you make a ₦400,000 claim, you pay ₦100,000 and the insurer pays ₦300,000.
The point of it is behaviour. If insurers paid every small claim, everybody would claim for everything and premiums would be enormous. The deductible keeps you slightly invested in avoiding the loss, and it keeps small nuisances out of the system.
The useful part for you is that it is a lever. A higher deductible means a lower premium, because the insurer carries less. If you have a solid emergency fund and could comfortably absorb ₦200,000, then choosing a higher deductible is simply refusing to pay an insurer to protect you from something you could handle yourself.
But be honest about that number. A high deductible you cannot actually pay is not a saving. It is an uninsured loss with extra paperwork, and you will meet it on a bad day.
Raising your deductible from ₦50,000 to ₦200,000 cuts your annual premium from ₦180,000 to ₦120,000. You save ₦60,000 a year and you must be able to find ₦200,000 on the day something goes wrong. With an emergency fund, that is a good trade.
Questions people ask
Should I choose a high or low deductible?
High, if you have an emergency fund that could absorb it comfortably. Low, if you could not. Never choose one you cannot actually produce on the day.
Is a deductible the same as an excess?
In everyday use, yes. Different insurers and different countries prefer different words for the same idea.
Does the deductible apply to every claim?
Usually to each claim separately, so several small claims in a year can each carry it. Check the policy, because the wording varies.
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