Dwelling Policy Practice Test 2025 - Free Dwelling Insurance Questions and Study Materials.

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What is the effect of choosing a high deductible on a Dwelling Policy?

It typically lowers the premium costs

Choosing a high deductible on a Dwelling Policy typically lowers the premium costs. This is because when the insured opts for a higher deductible, they are taking on more of the financial risk themselves. Insurers view this as a way to decrease their liability for smaller claims, which allows them to offer lower premiums to the policyholder.

Higher deductibles generally mean that the policyholder will pay more out-of-pocket in the event of a claim, which reduces the frequency and number of small claims submitted to the insurance company. Consequently, the insurer saves on administrative costs and potential payouts, passing some of those savings onto the policyholder in the form of reduced premiums. This relationship between deductible amounts and premium costs is a key principle in insurance pricing strategies.

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It will guarantee full coverage for all claims

It increases the overall insurance coverage

It has no impact on premiums or claims

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