Why does having a higher deductible lower your insurance premiums?

Question: Why does having a higher deductible lower your insurance premiums?

Having a higher deductible lowers your insurance premiums because it shifts more financial responsibility to you, the policyholder. Here's how it works:

1. Reduced Risk for Insurers: By agreeing to pay a larger portion of costs upfront in the event of a claim, you reduce the insurer's financial risk. This allows them to charge lower premiums.

2. Fewer Claims: Higher deductibles discourage filing small claims, which saves administrative costs for insurers. This reduction in claims contributes to lower premiums.

3. Encourages Responsible Behavior: Insurers may perceive policyholders with higher deductibles as more cautious, further reducing the likelihood of claims.

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