What is the purpose of a deductible in an insurance

policy?

A To increase the insurer's profit margin. Correct Answer Incorrect Answer

B To discourage small claims and encourage risk management by the insured. Correct Answer Incorrect Answer

C To guarantee payment of all claims Correct Answer Incorrect Answer

D To simplify the claims process Correct Answer Incorrect Answer

E None of the above Correct Answer Incorrect Answer

Solution

Deductibles are a portion of the loss that the insured is responsible for paying. They help to: Discourage the filing of small, insignificant claims. Encourage the insured to take precautions to prevent losses, as they will bear the initial cost of any claim. Reduce premiums for the insured.

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