You buy commercial auto insurance to protect your business’s investment in a vehicle. Rather than letting your profits pay for losses, let your policy pay instead. Having coverage is a great way to minimize how much you pay for vehicle damage. Still, you might still face residual costs. This will often include a deductible for vehicle damage. What is this common element of your coverage?
With commercial auto insurance, you’ll get a lot of help with vehicle damage. However, you’ll probably have to pay your fair share through the deductible. Consider this protection valuable to your insurance affordability.
What’s a Car Insurance Deductible?
Most commercial auto insurance customers carry physical damage protection. Usually, this includes comprehensive and collision insurance. The collision coverage will pay for damage from a wreck. Comprehensive protection will pay for damage from accidents like fire, weather or theft. If you have these coverage elements, your policy will help pay for the damage to the vehicle.
Still, these elements will likely include deductibles. A deductible is the part of damage costs you agree to pay before your insurance covers the rest of the claim. The deductible for comprehensive and collision coverage will usually be the same amount.
Let’s say you carry a $1,000 deductible on your policy. Following a wreck, your vehicle needs $3,000 in repairs. You’ll agree to pay the $1,000 deductible. Your insurer will then pay the remaining $2,000 of the claim ($3,000 - $1,000 = $2,000).
Thus, think of your deductible as taking responsibility for a part of the expenses. It’s something of a down payment for your services.
Can a Deductible Benefit You?
Commercial auto insurance deductibles are likely costs out of your profits. That’s a blow to the business. However, it’s likely much less than any damage costs you might face without auto coverage.
Furthermore, deductibles can prove beneficial in the long run. They might even reduce the costs of your commercial auto policy.
By choosing a higher deductible, you agree to take on more responsibility for damage. Thus, you shift some of the risk for these damages away from your policy and insurance company. That means the insurer might have to pay out less than they would if you took a lower deductible. As a result, they might even reward you with a lower policy rate.
Every business owner should talk to their insurance provider about their auto deductible. If you can afford to take on more of the cost, you might find it more beneficial for your long-term insurance costs. Don’t hesitate to contact one of our agents.