Why do I have to pay a deductible?
Insurance companies include deductibles on home insurance policies for two primary reasons: to reduce the premium and to make sure you have an interest in preventing losses. In the first instance, the larger the deductible you are willing to take in the event of a loss, the less the insurance company will pay on a claim. This process shifts some of the financial burden of the loss to you, and the insurance company can reward you for this by reducing the premium it charges.If you are financially able to pay a large deductible in the event of a loss, you may save a significant amount of money by paying less for the insurance premium.
In addition to reducing the premium, the insurance company also believes you will be less likely to file claims because you would first have to pay your deductible after a loss. The deductible is used as a motivation for you to protect your property and prevent damage from occurring to begin with because a loss will have a negative financial impact on you. This creates a win-win situation for both you and the insurance company.