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
Some good answers here, but I don’t know that many are ELI**5**
Let’s say you’re worried something bad might happen. Insurance is a way of protecting yourself against that.
The way it works is the insurance offers to pay for everything **after** you’ve paid a certain amount.
Imagine you wanted to buy a bike. It costs $150. You save and save but can’t quite get there. Your parents offer “You pay $50 and we’ll pay the rest”.
That’s what’s happening here. You pay the deductible and the insurance pays for the rest.
Insurance companies aren’t just giving it away though, you have to pay them. The less you pay, the more they’ll want you to be responsible for should something bad happen.
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