why do insurance companies charge a deductible?

Answer 1

Think of the moral hazard if there was no deductible. Can you imagine some lest honest ppl who would do damage to their own car on purpose to get a new paint job or a new vehicle all together? Deductibles also keep your premiums down and they reduce the # of claims the company has to deal with. This also keeps cost down in general. Putting some responsibility on the insured helps prevent fraud.

Answer 2

You choose your deductible when you buy your policy. It's not picked by them. Some companies won't offer zero deductibles. Some do. If you get 0 deductible, your rate will be higher. A deductible reduces the amount the insurance company pays, it's an amount you agree to absorb yourself in the event of a loss. When insurance companies pay less, then they can keep rates the same. If they started paying more on claims, the cost would eventually pass on to the insureds.

Answer 3

A lot of times your vehicles end up with minor scratches & dents costing just a few hundred dollars to repair. This way they don't have to bother with it. They will tell you that it's not in their interest to fix it. If you have 500 deductable and the damage is 6-7 hundred, they still won't.

Answer 4

You can arrange to not have a deductible...but you'll be paying very high rates. Having a deductible lowers your insurance cost.

Answer 5

It keeps your monthy payment down and you can get a 0 deductible if you choose but its expensive.

Answer 6

It lowers the premium for your insurance since you are taking part of the risk.

Answer 7

1 of many reasons is that it helps reduce their operating cost....if it were 100% free they would have to increase their staff to process small claims that are more easily handled by the owner of the property.