What impact does a higher deductible have on an insurance premium?

A higher deductible typically results in a lower insurance premium. This is because when a policyholder chooses a higher deductible, they are agreeing to assume a larger portion of the financial risk in the event of a claim. Insurance companies reward this decision by lowering the premium since they are less likely to pay out smaller claims that the policyholder will cover themselves. Essentially, the higher the deductible, the lower the premium cost, as the insurer’s exposure to loss diminishes. This relationship encourages consumers to take on more risk by opting for a higher deductible while enjoying reduced premiums in exchange.