Ace the 2026 RIBO Exam – Boost Your Insurance Broker Swagger!

The correct choice highlights the function of the deductible clause, which specifies the amount that policyholders are responsible for paying out of pocket before their insurance coverage kicks in. Essentially, it represents a predetermined amount that reduces the insurer's liability in the event of a claim.

This clause encourages policyholders to share in the risk and helps to manage claims, as individuals are less likely to submit claims for minor losses. Therefore, when a loss occurs, the insurer only pays for the amount that exceeds the deductible, making option C a clear and accurate representation of its purpose.

In contrast, other options focus on different aspects of an insurance policy. The total amount of coverage refers to the overall limit of liability provided by the insurer, while the specific payment an insurer will make for lost property relates to the coverage specifics but does not cover the deductible aspect. Lastly, coverage limits pertain to the maximum amount a policy will pay for particular claims, which is separate from the deductible influence on that payment.