Just because your commercial auto insurance policy might pay for a multitude of costs, that does not mean it will cover 100% of the cost of your claims. When you file a damage claim on your policy, you will likely have to pay the cost of the deductible. What are deductibles? How can you manage to pay them?
A deductible is a policyholder’s personal responsibility for the cost of a commercial auto insurance claim. Your policy will list a deductible (sometimes multiple deductibles) that policyholders must pay before a policy pays the remaining claim amount.
For example, your commercial auto collision coverage might include a $1,000 deductible. So, if you hit a light pole, you can file a claim on collision insurance to pay for your vehicle repairs. You will pay the $1,000 deductible first, then your policy will pay the remainder of the claim. For example, if you have a claim for $3,000 total, then you will pay the $1,000 deductible and the policy will pay the remaining $2,000, since ($3,000 – $1,000 = $2,000).
Do All Policies Contain the Same Deductible?
The deductibles available within commercial auto policies will vary considerably. In some cases, policies will even contain multiple deductibles. Elements of your policy that might contain deductibles include:
- Collision coverage that pays for your vehicle if it sustains damage in wrecks.
- Comprehensive coverage insures your vehicle damage that results from non-accident hazards like fires or theft.
- If you have uninsured/underinsured motorist protection, you might have to pay a deductible on related claims as well.
Liability policies usually will not include deductibles.
Sometimes, you must pay several separate deductibles at once if you have to file a claim on multiple parts of your policy. However, sometimes, you might be able to buy what is called a single deductible endorsement. If you buy this element, even if your policy has multiple deductibles, you will only pay the highest deductible triggered by a given claim. That’s a great benefit for commercial drivers. It will save them money on the cost burden of deductibles.
Drivers can use their commercial auto insurance deductibles to their financial benefit. The higher the deductible(s) you choose, the lower your policy’s premium might be. That happens because if you raise your own cost responsibility, you will lower that of an insurance company. Because they might not have to pay as much money for claims you file, they might not have to charge you as much.
Given that commercial auto policies can contain a lot of different deductibles, it’s best to ask your agent up front about how those within your own policy will work. Ask them where you have leeway to change yours to suit your own cost responsibility. You don’t want to pay so low a deductible that your rates might unfairly rise. However, you don’t want one that is so high that your business can’t afford to pay it anyway.
Also Read: 3 Questions to Ask Before You Purchase Business Insurance