Getting insurance coverage is always a prudent decision for protecting yourself, your family, your business, and your assets. There are different variables that you and your insurance provider must consider and negotiate, and a common one is your deductible.
“Deductibles can help you get the coverage you need without having to pay a high premium,” explains Richard Cayne of Meyer International. “And although you hear the term used a lot, many people don’t understand the variance nuances.”
Insurance deductibles protect you and your provider
Normally, there are two costs you must pay for insurance, the premium and the deductible. The premium is the cost for the policy. This you could pay in instalments or all at once to ensure coverage. The deductible is the amount you’re responsible for before the insurance company starts paying out.
You might think that paying premiums for insurance coverage should be enough to guarantee pay-outs. Well, it could be, but the premium amounts may be extremely high. With a deductible, you’re showing your willingness to act responsibly to the insurance company. By agreeing to pay for a certain amount of loss, the insurance company will see you as less likely to make frivolous claims. And you may become reckless if you think that insurance will always cover your losses.
Also, if there is no deductible, not only may the premiums skyrocket, but what the insurance policy covers may also change. You may only get coverage for catastrophic losses or other less likely events.
Deductibles can also help you save money
When deciding how much coverage you want, you should also look at how much you’re willing to go out-of-pocket for a deductible. Since deductibles are only important when it comes to claims, you may want to consider a higher deductible, as this may bring your premiums down. And since premiums are a fixed cost, this is something that you can control.
Just as an insurance company will assess you, you should assess yourself. Do you drive a lot? Do you travel to developing countries? Does your business deal mostly in cash? Are your properties in locations prone to floods, fire, or other natural events? Each type of insurance has its own conditions and categories that you should be aware of when negotiating your coverage.
Ask for help with your insurance decision
Not sure what type of insurance you need or what type of policy would work best for you? Contact your trusted advisor to go over what your requirements are so that you can protect everything important to you with proper insurance coverage.