Non-profits need property insurance. Their tight budgets often make it more difficult to pay for property damage without coverage. However, even with protection, you'll likely have to pay some of these costs yourself. Usually, this includes paying your deductible. It's an important part of most property policies. How can you approach this element of coverage in a practical way?
You can influence the size of your deductible. In fact, doing so could be crucial in making your policy affordable. Still, remember that when choosing a deductible, it's best to keep your greater needs in mind.
How Deductibles Work
Most property policies don't pay for all property damage a non-profit could experience. Instead, they have the property owner bear some of the cost risk. Deductibles help property owners retain some of their own responsibility for damage.
Think of your deductible as the price you pay for property losses before your insurer covers the rest of a claim. It's a cost that you pay from your own pocket.
Here's an example of how this works. Let's say you have a $1,000 deductible, and you make a $3,000 claim on your policy. You will pay the $1,000 deductible first. Your insurer will then pay the remaining $2,000 on the claim. Therefore, you will share some of the financial responsibility for your losses.
Managing Your Deductible And Policy Costs
Remember, you can manipulate your deductible to meet your needs. Often, this helps you reap the most financial benefits from your coverage. A couple of factors come into play here.
- When you have a higher deductible, it shifts costs away from the insurer. Therefore, that lowers the risk you pose to them. They might cause them to lower your premium as a result.
- With a deductible, you'll often want to pay smaller damage costs out of pocket, rather than rely on a claim. Those are often more related to standard business costs, anyway. Therefore, you'll create less of a reliance of your insurance policy, and thus reduce your risks.
Insurers set premiums based on the risks of paying a claim. Increasing your deductible can lower your own costs up front. The smaller a chance the insurer has of paying an expensive claim, the less they may charge you for your coverage. That's an immediate cost savings. If you have the budget to make this wiggle room, you can often benefit from the advantages.
Keep in mind, your overall operating budget will often help you choose a deductible. If you can afford a higher deductible, consider taking it. But, if your budget merits a lower deductible in exchange for more coverage, this might be the way to go. Talk to your California Church Insurance Services agent about the best course of action for your group.
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