by Nate Jones, CPCU, ARM, CLCS, AU - Wexford Insurance - Indianapolis, IN
Most of the time, people and businesses renew their insurance year after year without considering different options. Different options isn't always moving insurance companies.
One different option we like to look at is different deductible levels. From time to time raising your deductible can result in a premium decrease that is worth the increase in retention. This process is very tailored to the clients profile.
We have provided some insight below on what that process looks like.
What is the clients appetite for risk and financial situation?
Every individual and business has a risk appetite. Raising a deductible may not align with that appetite. Usually what drives the risk appetite is the clients financial situation. If the deductible is at a level that puts the client in a negative financial position post loss, then sometimes it makes sense to lower the deductible. Understanding each situation is important before changes are made.
Is the juice worth the squeeze?
If the deductible is able to safely be raised within the clients risk appetite does the premium decrease justify the increase in retention? This the question that usually determines if raising a deductible makes sense. In best cases, the premium decrease would likely put more money back into the clients pocket to more than pay for the deductible increase within a couple of years.
Which insurance coverage should I evaluate this for?
Usually, we recommend that clients consider deductible options on coverages where they feel like they would rarely have a claim or have had great loss experience.
When and How can I begin this process?
Usually at renewal is the best time to evaluate your deductible options. You can, however, evaluate your deductible options any time during your policy term.
Wexford Insurance can help you with this process. If you already have a trusted insurance partner, you can always reach out to them as well.