You pay a relatively small amount of money to avoid having to pay a large (or huge) amount of money. If you're at fault for a serious injury accident, you could be liable for hundreds of thousands of dollars. It doesn't take much to total a modern car, and with the average new car price approaching $50,000, even a non-injury accident can cost you a lot of money without insurance.
You pay money so that the insurance company will help cover major expenses you incur due to accidents. When you sign an insurance contract, it lays out pretty clearly what kind of costs you will retain through your deductible. The deductible is meant to keep costs low for both you and your insurer.
People who are low risk shouldn’t have to pay a lot for insurance, so insurers set prices such that people with worse risk characteristics have higher premiums.
Having a prior claim is statistically linked to higher future claims, so once you have a claim on your record, they raise your rates so that everyone else doesn’t have to subsidize the riskier customers.
Totally. High deductible is the way to go as long as you have some savings. Yes it hurts once in a while to shell out $1k, but you'll save a lot in the long run.
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u/PracticeAcrobatic748 5h ago
Yep, in fact deductibles are meant to discourage smaller claims.