What type of insurance policy typically requires a deductible?

The correct choice is property insurance because this type of policy often involves deductibles as a standard practice. A deductible is the amount that the policyholder agrees to pay out-of-pocket before the insurance coverage kicks in for a covered loss. In property insurance, this mechanism helps to reduce the insurance company's overall claims costs, as it requires policyholders to share some of the financial responsibility in the event of a loss.

By having a deductible, property insurance policies encourage responsible behavior, as policyholders may be more cautious to avoid making small claims. This is particularly relevant in covering damages to homes, businesses, or other physical assets where the potential for loss can be substantial.

Other types of insurance, such as valued policies, often set a predetermined value for the insured item and do not commonly use deductibles in their structure. Liability insurance primarily protects against claims for damages to others, so it generally does not involve deductibles in the same way as property insurance. Life insurance is designed to pay a benefit upon the insured's death and does not include a deductible, as it is structured to provide a direct payout rather than reimburse costs incurred.