Having a Higher Deductible lowers your Insurance premiums because it shifts some of the financial risk from the insurance company to the policyholder. In other words, with a higher deductible, the policyholder agrees to pay more out-of-pocket expenses before the insurance coverage kicks in.

By agreeing to pay more out-of-pocket expenses, the policyholder is essentially taking on more financial responsibility in the event of a claim. This reduces the amount of risk that the insurance company is exposed to, which allows them to offer lower premiums for the policy.

For example, imagine you have a car insurance policy with a $500 deductible. If you get into an accident and the damage to your car is $1,500, you would pay the first $500, and the insurance company would pay the remaining $1,000. However, if you had a $1,000 deductible instead, you would be responsible for paying the first $1,000, and the insurance company would only be responsible for the remaining $500. Since you are taking on more financial responsibility in the second scenario, the insurance company is able to offer you a lower premium.

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