What happens when an insured pays a higher deductible?

When an insured chooses to pay a higher deductible, the typical outcome is that the premium for the policy usually decreases. This is because a higher deductible means that the insured is taking on more of the financial responsibility in the event of a loss. Since the insurer has a lower risk of having to pay smaller claims, they are generally willing to offer a lower premium in exchange for this increased deductible.

This principle is rooted in risk management; by opting for a higher deductible, the insured effectively reduces the number of claims the insurer may have to process, allowing the insurer to lower the overall cost of the policy.

The other choices do not align with the implications of choosing a higher deductible. For instance, a higher deductible does not mean that the insurer will cover higher losses; rather, it indicates that the insured will pay more out of pocket before the insurer starts to contribute. Similarly, the coverage does not become more comprehensive with a higher deductible; the scope of coverage remains the same, but the insured assumes more risk. Lastly, opting for a higher deductible does not typically result in filing more claims; in fact, it often discourages making small claims due to the higher out-of-pocket costs.