Deductibles serve several functions.

• Shifting the cost of small claims to the person buying the insurance (insured)
• Enables the insurance company to reduce premiums.
• Adjusting claims for small amounts often costs more than the value of the claim.
• A deductible on a policy gives the owner of the property some degree of responsibility to protect his/her property.
• The cost of insurance would be much higher if there were no deductibles.
• The higher the deductible, the lower the premium.