Purchasing business insurance often includes a lot of industry jargon that can be hard to decipher. If your company is just starting to grow and become secure, you may notice a new option when you’re seeking insurance: deductible reimbursement policies. Understanding a bit about them could help you determine if a DRP is right for your company.
What Is a Deductible?
Before understanding how reimbursement works, you must first learn what a deductible is. The simple answer is it’s a price tag. An insurance deductible is the price you must pay if you file an insurance claim. For example, if your employee is in an accident with a company car, you may need to pay a specific amount before your insurer before the agency covers the rest. Typically, if you have a low deductible, you’ll pay higher insurance rates and vice versa. Deductible reimbursement policies repay deductibles to the policyholder and are common for large companies that are financially secure, especially those that have commercial insurance lines.
What Are the Benefits of Deductible Reimbursement?
A number of deductible reimbursement benefits exist. For one thing, a DRP reduces insurance expenses related to working with third parties. It also creates smooth insurance premium cycles, provides more control for proactive risk management, and helps to realize investment income.
If you think a DRP may be the right choice for you, talk to your insurance agent. He or she can help you learn the advantages and disadvantages. Remember, always work with someone who is licensed and has excellent reviews.