What is a device used to minimize small property claims and keep insurance premiums down?

A deductible is a specified amount that a policyholder agrees to pay out-of-pocket before the insurance coverage kicks in for a claim. This mechanism helps minimize small property claims because policyholders are less likely to submit claims for minor damages or losses that fall below their deductible amount.

By incorporating a deductible, insurers can reduce the number of low-cost claims, which in turn helps keep insurance premiums lower for all policyholders. This cost-sharing feature discourages frivolous claims and encourages policyholders to take greater care of their property, thus fostering a sense of personal responsibility for less severe incidents.

In contrast, a valued policy guarantees a predetermined amount of compensation regardless of the actual cash value at the time of loss, which does not specifically serve the purpose of minimizing small claims. Insurable interest pertains to the requirement that a policyholder has a legitimate stake in the property being insured, while coinsurance involves a clause that requires the policyholder to insure a property for a specified percentage of its value, both of which also do not directly relate to minimizing small claims and keeping premiums down like a deductible does.