What is the purpose of a deductible?

Deductibles are really designed to reinforce the basic concept of insurance as a means to protect yourself from catastrophic financial loss. Using deductibles, policyholders take responsibility for small losses and seek insurance for large losses that could cause financial hardship. Deductibles are also the amount of the loss you will pay before your insurance company makes a payment. Increasing your policy deductible will decrease your premium because you are assuming more responsibility.