Do people have a bias for low deductible insurance?

This paper reports on a controlled web-based experiment designed to determine whether subjects have a predisposition toward low deductible (LD) rather than high deductible (HD) insurance plans when the LD plan is the default. We also are interested in whether individuals’ choice between LD and HD plans remains consistent if the default and premiums are changed. We find that only slightly more than half of the respondents choose a low deductible when the default option is the LD plan, and that many subjects consistently preferred the HD plan. In other words, we found no general preference for low deductible insurance. The research presented here should be viewed as another step in highlighting the importance of understanding individuals’ decision processes associated with the purchase of insurance.