A deductible is the amount of money you agree to pay as your share of the cost of a claim before the insurer is committed to paying the rest of the claim.
Deductible helps mitigate the moral hazard in insurance. This means the risk that the policyholder may not act in good faith. So, deductible helps keep the policyholder more accountable and responsible by imposing financial consequences.
Keep in mind that the deductible and the premium are inversely proportional – the lower the deductible, the higher the premium and vice versa.
So, is there a way to avoid deductible? Some insurers in Nevada offer a “vanishing deductible.” For each year you are accident-free, the insurer will reduce your deductible amount. Like a prize for good drivers. Vanishing deductible is an extra option. Is it worth it?