Scenario: I pay X amount of dollars per month for car insurance. I have all 4 tires stolen from my vehicle overnight. I submit a claim with my insurance company to repair any damages. I now pay a **hefty** X amount of dollars for the event that has occurred.
In: Other
A deductible is a way to keep rates lower by defraying a claim cost for insurance and by setting a bar at which a claim is even considered.
Imaging you have zero deductible. You could file a claim every time you get a door ding at the grocery store and have insurance pay to fix it. And if customers did this and the insurance company paid out for a ton of little claims, it’d mean having to charge higher rates. But by setting a point where one will not submit a claim at all, it allows rates to remain cheaper.
Also, it makes you more careful as a driver because even if you don’t have to pay the full $5000 repair if you’re at fault in an accident, it still hurts enough to pay $500 or $1000 that you don’t drive recklessly.
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