I really don't understand it. You drive your car and pay insurance on it for years and years you get in a accident and you have to pay a deducible. Why do you have to pay them money after already paying them tons? Do they pay it back? Or do they say we owe it just because? And that goes with all different types of insurance (health, house, car, etc).
2007-11-13 09:21:27 · 11 answers · asked by Anonymity 5 in Business & Finance ➔ Insurance
here is the right answer.
for health insurance, if your insurance is through your employer they choose the health plan for their employees. the lower the employees "out of pocket expense" (meaning deductibles and copayments) the higher the premium. if they choose an upfront deductible for medical services, then their premiums will be lower. the cost of health insurance goes up yearly b/c healthcare costs go up. the biggest factor for the rise in your premiums is unneccessary use. people go to the ER for anything nowadays which i don't understand.
as for car insurance, if you have a $500 deductible your premiums will be lower than a policy w/ a $0 deductible.
everyone thinks that insurance is a rip off, but it is just one of those things that you need. with out it, could you afford a $50k hospital bill or a brand new car incase yours is totalled?
2007-11-13 12:33:47 · answer #1 · answered by kimmy 2 · 2⤊ 0⤋
Because you're paying a small share of the cost.
Think about it this way - you get an insurance policy, pay the monthy amounts for awhile, then get in a huge accident or your house burns down. Now the insurance company has to pay a huge amount of money. You get to buy a new car or house with the money. What's to prevent you from having another "accident" the next time you want to upgrade? It won't cost you anything. So you do it again and again, and other people start doing it too, and then the insurance company can't afford to pay for real accidents, much less fake accidents.
So the deductible acts as a discouragement from this sort of fraud.
Deductibles may seem unfair, especially for minor accidents, but if you've ever seen the bill for a big disaster or surgery, you'll see it can be very reasonable. My deductible for a minor fender bender was 10% of the total repair costs; my mom's deductible from a major operation was only a few thousand instead of over a hundred thousand.
So yeah, it sucks, but it really is worth it in the long run.
2007-11-13 17:31:33 · answer #2 · answered by teresathegreat 7 · 1⤊ 0⤋
When you took out your policy and purchased "full coverage" - comprehensive and collision coverage for your vehicle- you selected a deductible. For a higher premium, you can purchase a 0 deductible.
When you select a deductible (say 500) you are agreeing that you will pay for any damage that happens to your vehicle that is less than 500 - in essence, you retain the risk for the minor claims.
If you have damage more than 500, you are agreeing that you will pay for the first 500 worth of damage if the insurance company picks up the rest.
The higher the deductible you select, the lower your premium.
2007-11-13 19:15:49 · answer #3 · answered by Boots 7 · 2⤊ 0⤋
You have the option of not having a deductible or having a lower one. However the cost of the insurance is much higher.
The lower the deductible, the higher the insurance. By having a deductible you and the insurance company are "betting" that you won't have an accident. If you have a bad one or get hurt the cost of fixing or replacing the car and fixing you is usually much higher than the cost of the policy. The totals of everyone's deductible pays for that.
2007-11-13 17:45:37 · answer #4 · answered by Dirty Dave 6 · 2⤊ 1⤋
You pay the deductible, so you don't file a claim for every scratch you get on your car. The purpose of the claim, is to make YOU take a little bit of care with your car, and to minimize frivilous claims.
Like the homeowners deductible - so every time you lose a paperclip, you don't file a claim.
It's all the same principle - if the insured is NEVER out ANYTHING for a claim, they'll put in a ton of claims, and won't take care to lock the house, the car, or anything.
2007-11-13 19:33:16 · answer #5 · answered by Anonymous 7 · 2⤊ 0⤋
I think it might be a fraud deterrent. If you didn't have to pay out anything at all, you might be more likely to work up a scam against the insurance company with a fraudulent claim?
You might be filing piddly little claims for every little scratch on your car if there were no deductible, or having all sorts of little medical procedures done just because you could, if there were no personal outlay involved.
That and just to keep the premiums lower are the only reasons I can think of, besides the fact that they are able to get away with doing it, so they do it!
2007-11-13 17:27:34 · answer #6 · answered by arklatexrat 6 · 2⤊ 0⤋
Sad to say, but deductibles help to alleviate the habitual complainer that may only "think" they have a problem. Otherwise rates would even be higher for frivilous claims that professionals spend all their time working on with no compensation. The deductible amount directly effects the cost of the premium for risk association.
2007-11-13 17:26:37 · answer #7 · answered by Shawn D 1 · 2⤊ 0⤋
You don't HAVE to have a deductible on your auto insurance, but you will pay dearly for the privilege of not having a deductible. Most folks choose a certain level of deductible which they can afford in the event of a collision just to save money on the annual premium.
2007-11-13 17:28:35 · answer #8 · answered by acermill 7 · 3⤊ 1⤋
because the insurer wants you to share the risk. If you know you have a deductible, you will think about making a claim.
2007-11-13 22:18:30 · answer #9 · answered by WVAttorney 3 · 1⤊ 0⤋
The higher your deductible, the lower your premium and vice versa. Simple as that.
2007-11-13 17:27:37 · answer #10 · answered by npk 7 · 1⤊ 0⤋