Insurance Premium
An insurance premium is the recurring amount — monthly, quarterly, or yearly — you pay to keep a policy active, whether or not you ever file a claim. It's the price of transferring a risk you couldn't afford to bear yourself to the insurer.
Premium and deductible move in opposite directions, and the trade has a break-even you can calculate. If raising a deductible from $500 to $1,500 cuts the premium by $200 a year, you are accepting $1,000 more exposure to save $200 annually — worth it if you claim less than once every five years, which most people do, and only bearable if that $1,000 already exists in savings. The principle underneath: insure what would be financially devastating, not what would be merely annoying. Small claims are also worth avoiding for a second reason — claim history affects future premiums, so a $600 claim on a $500 deductible can cost more over time than paying it yourself.