For insurance companies to be able to protect themselves from trivial claims, insurance policies contain clauses for agreed deductibles. Deductibles are expenses that have to be paid by the insured out of his own pocket before an insurer pays out any expense arising from the claim. Clauses pertaining to deductibles determine the threshold of insurance companies in relation to policy statements.
Insurance policies where clients agree to a higher deductible allow for cheaper insurance premiums. This is because insurance companies are able to avoid paying for numerous small claims which can ordinarily be easily borne by the insured. By limiting coverage to claims that arise from an event resulting to large costs, insurance companies get higher savings which they pass on to customers through lower premiums.
The deductible clause effectively holds at bay possible abuses for insurance claims. Most insured will not give a second thought into making claims at every possible instance if they know that the insurance company will shoulder all expenses. With an insurance deductible clause in place, the insured will be encouraged to attend to small problems by themselves and not be fully dependent on insurance claims alone.
In the view of an insurance business, trivial claims are like nuisance claims since many are capricious in nature. The lack of deductible clause in an insurance policy necessitates offsetting the level of risk involved typically through higher premiums. A client’s assumption of higher deductibles manifests goodwill on his part.
Insurance arising from damage or loss of an insured vehicle are covered to the extent indicated in the policy and the agreed deductible. This includes claims resulting from theft, vandalism, and accidents, whether or not the insured is responsible. Deductibles are also found in third-party liability coverage which have their own complexities.
All vehicle insurance policies contain deductible clauses. Clients will have to determine how much they are willing to pay. Some states have set amounts of deductibles for automobile insurance.
About the Guest Blogger
Melinda is a private car owner who has made use of car insurance quotes made available online.