Understanding the Standard Deductibles for Business Owners’ Policies

Business owner’s insurance policies often include several types of coverage. General liability, commercial property, and business interruption insurance are the most common types of coverage you need. But you might also add additional types of coverage based on the type of business you operate. When you create a customized business insurance policy, one of the decisions you’ll need to make is how much of a deductible you’ll agree to cover if you file a claim. Knowing what the standard deductible is gives you a starting point for coming to a knowledgeable decision.

Know How Deductibles Work

A deductible is the amount of money your company anticipates paying out of the claim’s total amount. For instance, if your insurance claim includes $5,000 worth of damage and the deductible is $1,000, your insurance company will pay out $4,000. The general purpose of the deductible is to shift some of the risk for covering the cost of a claim to the business owner.

Consider the Current Standard Deductible

For most business insurance policies, the standard deductible is $500. This amount tends to demonstrate a business’s willingness to cover a portion of the losses after a covered event. Yet it tends to fall within an affordable range for most small businesses. Keep in mind deductible amounts can range into the thousands, and it’s best to consider how using a higher deductible than a standard one can impact your premium.

Explore How a Different Deductible Changes the Premium

As a general rule, the premium goes down when the deductible increases. When you work with an insurance company to develop a quote, it’s common to inquire about how different deductible amounts alter your payment schedule. If you have a new small business that’s just starting out, you may find accepting a higher deductible makes the policy more affordable. Alternatively, you may opt for a smaller deductible if you’re concerned your new business currently lacks the capital it needs to pay more if an unexpected catastrophe happens.

Weigh the Benefits of a Higher Deductible

Setting a higher deductible that lowers the premium could also make it possible to afford additional insurance coverage. For instance, you might opt for new types of coverage designed to pay claims for data breaches and other cybersecurity incidents. Increasing the coverage for your business could make the difference between staying afloat or having to close its doors if a serious incident occurs.

Make Sure Your Business Can Cover the Deductible

Knowing what your business needs to cover during a challenging time makes it easier to plan for the future. Once you agree on a certain deductible amount, set those funds aside to use in the event of a catastrophe. Being able to avoid having to cut corners on repairs or scrambling to come up with the deductible reduces stress on you as a business owner. While you’ll hopefully never need it, having funds to cover the deductible gives you peace of mind if you need to file a claim.

Business owners need to make sure they protect their companies and employees by purchasing the right insurance coverage. For affordable, reliable commercial insurance as well as homeowners, renters, motorcycle, and auto insurance, San Diego residents call on the trustworthy professionals at Altra Insurance Services. Reach out to us today to learn how we can satisfy all your insurance needs.