Why do you have to pay a deductible?

Updated: 9/18/2023
User Avatar

Wiki User

14y ago

Best Answer

An insurance deductible is a way for the insurance company to share a risk with the policyholder, and to reduce the premium payment required. By buying a policy with a $500 deductible, the policyholder agrees to be responsible for the first $500 of any covered loss. The insurance company is insuring only those losses exceeding $500, so they charge less for the premium. Most claims will be less than $500, or not much over, so their risk is reduced.

You can usually buy a policy with a smaller deductible, or with no deductible at all. You will find those policies are considerably more expensive, as you're asking the insurance company to assume a greater risk. The general rule is that your deductible should be the largest amount you could cover with your own funds, should a loss occur. If you buy a collision policy for your car with a $500 deductible, and the car is destroyed, it will cost you $500 to replace it--the insurance company will pay the rest. So long as you can lay hands on $500, you know you'll have a car to drive. If you get through the policy term without the car being wrecked, you get to keep your $500, and the money you didn't pay for a higher premium with less risk.

User Avatar

Wiki User

14y ago
This answer is:
User Avatar

Add your answer:

Earn +20 pts
Q: Why do you have to pay a deductible?
Write your answer...
Still have questions?
magnify glass
Related questions

Do you have to pay the deductible if you hit another car?

If your policy contains a Deductible clause then yes you will have to pay your deductible.

If you are at fault in an auto accident do you have to pay the other persons deductible?

No, you have to pay your deductible.

Do you have to pay a deductible if your car is stolen?

Yes. You would have to pay what your comprehensive deductible is.

Do you have to pay your auto deductible if your vehicle is not damaged?

No. You only pay your deductible if you are setting up repairs.

How can you pay the deductible for lap band surgery?

You can pay the deductible for the lap band surgery directly to the hospital or doctors office. You can even ask if you can have a payment plan to pay the deductible.

Does a deductible apply for hitting a deer?

Yes! I did it and had to pay my deductible.

Can you make the driver of your vehicle pay you the deductible after the accident if they are at fault?

If they have insurance then you should not have to pay a deductible at all.

Do you have to pay your deductible if you hit a deer in your vehicle?

You have to pay your deductible no matter what if your insurance company asks for it because that's the part you pay.

What is the difference between deductible and premium?

The premium is what you pay for the policy. The deductible is what the insurance company will not pay for what is covered. For example you buy a car policy for collision. You pay the premium of $50. If you crash the car, the company will not pay any thing less than the deductible. If the deductible was $1000 and you sustained $1500 damage, the company would pay you $500. If the damage was less than the deductible, you get nothing.

Do Hospitals have a deductible?

Yes you usually have a deductible amount that you have to pay to the hospital.

If my insurance company deducts my deductible from a homeowners claim do i still pay the deductible?

Yes. The insurance company will pay their portion of the claim which does not include the deductible because that is your portion .

If your car gets hit by a customer in your company parking lot. A hit and run. does the company have to pay your deductible?

No, they don't pay your deductible and neither do you, a deductible does not apply to a hit and run.