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12/29/2011 - Lesser known aspects of deductibles


A higher deductible may mean lower premiums.

Small business owners who are familiar with their insurance policies know that a deductible is basically the amount of money that a person making a claim pays before the insurance company pays the rest. But there are other aspects of deductibles that they may not be familiar with, according to the Insurance Information Institute.

For instance, even though insurance companies set minimum deductibles, policyholders can raise them if they so choose. While this may cost policyholders more money out of pocket in the short term, the III says raising them can wind up saving policyholders in the long run, as policyholders' monthly auto and homeowners insurance premiums will be less expensive.

Something else consumers may not be aware of is that deductibles don't only differ by company but also by state. As III indicates, because insurance is regulated by the states, insurers have to follow state laws with regards to how they're implemented and incorporated into the language of a policy. When reviewing a policy, III recommends asking about what some of these state laws are and how they affect them.

For more information about deductibles, click here.

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