Next Insurance

Deductible

Understanding what you need to pay and why you need to pay it when filing a claim.

WhatsappFacebookLinkedinTwitterEmail

What is a deductible?

WhatsappFacebookLinkedinTwitterEmail

A deductible is the amount of money you have to pay out-of-pocket before your insurance coverage kicks in. In short, it’s your buy-in to getting coverage.

What are the different types of deductibles?

There are different types of deductibles, but the two most common are flat-rate and percentage-based.

A flat-rate deductible is a fixed dollar amount, such as $500. When you file a claim, you pay the first $500 of the total cost.

For example, say you’re a contractor and a wall in the house you’re working on is damaged. It’ll cost $15,000 to fix. With a $500 deductible, you would pay the first $500, and your insurance company would pay the remaining $14,500 (up to the policy’s limits).

Percentage deductibles work, as you might expect, as a percentage of the total cost. For example, if that wall costs $15,000 to fix, and your deductible is 10%, you would have to pay $1,500, leaving $13,500 for your insurance company to cover.

Whether your deductible is flat-rate or percentage-based, remember this: it’s not a one-and-done deal. You have to pay the deductible for each occurrence or claim filed before your insurance company will cover the rest of the cost — at least until the cost reaches your insurance limits.

It’s important to note that different policies have different deductibles, and you should know what you owe before something happens.

For example, certain professionals like personal trainers or cleaners might have a $0 deductible on general liability insurance and a $500 deductible on professional liability insurance. It all depends on the business type and level of risk involved.

Or if you have a per-occurrence deductible vs. a per-claim insurance. A per occurrence deductible is like most auto or homeowners insurance you might be familiar with; you pay the $500, and that’s the max you’ll pay when something happens.

But if your deductible is per claim, that means a separate deductible gets applied to every claim filed in a single occurrence. If you’re a contractor working on an apartment or office building, you can see how one mishap affecting multiple parties could cost more than anticipated if multiple claims are filed (e.g., $500 x 10 claims = $5,000.)

If you’re unsure about what you have, doublecheck your policy. Find out which policy applies to which deductible, and how your deductible work and get yourself a little peace of mind.

How deductibles work at NEXT

Here at NEXT, we offer low deductibles to all our customers. We don’t charge a deductible for our general liability insurance policies, so you won’t need to worry about it.

Why is there a deductible?

We know what you’re thinking: “Wait a minute. I pay a monthly premium. Why do I have to pay a deductible?”

The simple answer? Deductibles keep people from filing lots of claims and making insurers pay for every little thing that might happen. Confused?. Let us explain.

Imagine if an insurance company offered auto insurance with a $0 deductible. That means for every little ding, dent or scratch, the insurance company would have to spend the time (and money) getting it fixed.

Not only would that company go broke really quickly, they also wouldn’t have the people or resources to quickly help someone whose car gets totaled.

By including a deductible, insurance companies ensure that they’re only getting claims from people who need real and immediate help or have damage serious enough to warrant paying the deductible first.

High or low deductibles, which is better?

This is one of those annoying “it depends on your circumstances” kind of answers, but it’s true.

When it comes to small business insurance, depending on your industry, a high deductible with a low premium may be the best course of action — of course, the opposite could be true.

When you look at the most dangerous jobs in America1, roofing comes in at No. 3, and construction comes in at No. 4. If you work in these industries, you probably already know that accidents are a matter of when, not if. So it makes sense  to have a higher premium and a lower deductible. That way, should something happen, you won’t have to pay as much out-of-pocket costs for those big expenses.

On the other hand, if you’re a certified public accountant (CPA) or an architect (the 4th and 9th safest jobs in America2), accidents are highly unlikely. You may want to raise your deductible to lower your monthly premium cost and save money over the long term.

Deduct stress with NEXT

You have enough to worry about as a small business owner without having to weigh the risks of a high deductible against the benefits of a lower premium.

At NEXT, you get affordable premiums and low deductibles because we tailor our insurance policies for more than 1,300 small business professionals.

You can start a quote, customize your options and access your certificate of insurance online immediately — in about 10 minutes.

Start your instant quote today.

There’s a lot to love about NEXT

Business insurance in less than 10 minutes

Get insurance in less than 10 minutes and you can save up to 25% in discounts*

Tailored business insurance

Unique, flexible coverage with easy monthly payments

Get business insurance online

Do it all 100% online or talk to a licensed U.S.-based advisor

Let’s find the coverage you need for your business

Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.

General Liability insurance
General Liability

Protect yourself from accidents that cause physical injury or damaged property.

Professional Liability or Error and Omissions Insurance
Professional Liability/E&O

Shield yourself from lawsuits that claim your work errors caused financial losses.

Workers' Compensation Insurance
Workers’ Compensation

Cover medical bills and lost wages if your employees have an accident at work.

Commercial Auto Insurance
Commercial Auto

Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.

Tools & Equipment Insurance
Tools & Equipment

Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.

Commercial Property Insurance
Commercial Property

Keep your building, inventory and equipment protected from fire or water damage.

Business Owner’s Policy Insurance
Business Owner’s Policy

Combine general liability and commercial property into one policy to protect your business.

Take a look at some helpful blog posts
Small business insurance 101: Learn the basics
Protect

Small business insurance 101: Learn the basics

Do I need business insurance? Your questions answered
Start

Do I need business insurance? Your questions answered

How occurrence vs. claims-made insurance protects your business
Protect

How occurrence vs. claims-made insurance protects your business

* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
What we cover
Chat with Us

Mon – Fri | 8 a.m. – 5 p.m. CT

FacebookYoutubeLinkedinTwitter
© 2022 Next Insurance, Inc. 975 California Ave, Palo Alto, CA 94304, United States
Better Business Bureau
Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.