Why does car insurance have deductibles?

I'm already paying an insurance premium that includes full coverage. Why do I need to pay a deductible?

Car insurance companies use deductibles as a method of risk retention. This means you take on part of the risk when you submit a claim for comprehensive or collision coverage.
Insurance companies also use deductibles to prevent small claims from being submitted frequently. Having a deductible for collision insurance prevents people from submitting claims for small things, like scratches or dents, or taking advantage of the policy by filing claims for everything.
While you can select a low deductible amount, your insurance premiums are often significantly higher. Since insurance is based on risk and claims are paid out of a pool, companies want to ensure that they will have enough in the premium pool to cover any claims. If deductibles didn’t exist, everyone’s insurance rates would be extremely high.
If you’re concerned about paying too much for car insurance, taking a glance at your current insurance policy is essential. Then you compare quotes on the Jerry app to find the best rates for your car insurance needs.”
Emily Maracle
Answered on Sep 09, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.

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