What term refers to the amount an insured must pay out-of-pocket before insurance coverage begins?

The correct term for the amount an insured must pay out-of-pocket before insurance coverage begins is "deductibles." A deductible serves as a cost-sharing mechanism in insurance policies where the insured is required to pay a certain amount toward a covered claim before the insurer starts to pay. This helps to reduce the insurance company's overall risk and encourages policyholders to be more cautious with smaller claims.

In contrast, premiums refer to the regular payments made to maintain an insurance policy. The out-of-pocket maximum is the highest amount the insured would have to pay in a policy period before the insurer covers 100% of the costs for covered benefits. Policy limits refer to the maximum amount that an insurance company will pay for a covered loss. Understanding these terms is crucial for anyone studying insurance practices, especially within a surplus lines context where certain risks and policies may not be standard.