frádráttarkostnaðar

Frádráttarkostnaður is an Icelandic term that translates to deductible cost. In the context of insurance, it refers to the amount of money that an insured person must pay out-of-pocket before their insurance coverage begins to pay for a claim. This applies to various types of insurance, including auto, home, and health insurance.

The deductible amount is typically a fixed sum agreed upon when the insurance policy is purchased. For example, if a car insurance policy has a deductible of 50,000 Icelandic króna and a car owner files a claim for 200,000 Icelandic króna in damages, the owner would be responsible for the first 50,000 Icelandic króna, and the insurance company would cover the remaining 150,000 Icelandic króna.

Choosing a higher deductible generally leads to lower insurance premiums, as the policyholder assumes more of the initial financial risk. Conversely, a lower deductible usually results in higher premiums. Policyholders select a deductible amount that aligns with their financial situation and risk tolerance. Understanding the frádráttarkostnaður is crucial for policyholders to accurately assess their potential out-of-pocket expenses in the event of a claim.