Choosing the Right Insurance Deductible

A deductible is the amount you pay before your insurance carrier pays any claim. Insurance companies include deductibles and sub-limits in insurance policies as a method of sharing risk with the businesses they insure. Insurers generally believe that

Your agent should be able to help you understand what comparable firms in your market take on in "retained risk" (an industry term for deductible). Often, however, there are not big decisions to be made. Many deductibles are standard, and many policies do not offer a huge choice in this area.

Some policies with a low cost but greater potential for claims might carry low or no deductibles. Other policies with low claim frequency, but potential for larger losses, might carry higher deductibles.

If you're given the option of choosing your deductible, select one based on both your tolerance for risk and what other companies in your industry purchase.