Why are deductibles (or excesses) applied to insurance policies?
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They are applied in order to:
Reduce the risk which the insurer takes on.
Ensure that the insured party retains a degree of liability by having to pay a deductible (or excess). This motivates him to take more care in avoiding the loss or damage.
Decrease the level of premiums paid by the insured party
Negate the administration costs of processing a large volume of small claims.