The sum of money you, the insured, must pay out of pocket before your insurance benefits kick in.

Depending on the policy, a deductible can be applied by year or by incident. Essentially, a deductible is the amount of money you agree to pay before collecting from your insurance company. The higher the deductible you choose, the lower your monthly or yearly premiums are likely to be.

Small-business owners should be careful to choose a deductible they can actually afford; in the event of a claim, the insurance provider won't pay benefits until the deductible has been met.