Question

(int-pt V)

To get an idea of how the size of the deductible impacts the premium charged to customers, see if you can find examples of the different premiums that a P&C carrier charges for different deductibles. Or perhaps you can get information about this from your insurer. You can do this for renters' insurance, auto, homeowners, boat insurance, et al.

Objective: Give me an example of the different premiums that a P&C carrier charges for different deductibles.

Answer 1

Changing the deductibles on your policy impacts what you pay in premiums, and is one of the ways that drivers can manage the auto insurance rates and risks they’re comfortable paying. The amount of the deductibles is inversely proportional to the premium, so increasing your deductibles will lower your rates, and vice versa.

A deductible is the amount you pay for health care services each year before your health insurance begins to pay.

In most cases, the higher a plan’s deductible, the lower the premium. When you’re willing to pay more up front when you need care, you save on what you pay each month.

The lower a plan’s deductible, the higher the premium. You’ll pay more each month, but your plan will start sharing the costs sooner because you’ll reach your deductible faster.

The premium is what you pay to buy and keep the coverage. The deductible is what you pay if you file a claim before your insurance company starts to pick up the tab.

For example, if you have a $500 deductible on your auto insurance and need $1,500 of repairs, you pay $500,and your insurer pays the remaining $1,000.