No one ever wants to make an insurance claim, but it can be necessary following an accident, theft, vandalism or similar loss. Obtaining quality coverage and working with a good boat insurance company can make the whole process much more pleasant.
» MORE: A Guide to Boat Insurance Claims
So, you have a covered claim. Now what? Before the insurance company pays for anything, your deductible will get subtracted from the bill. This means some of the expense associated you’re your loss may come out of your pocket.
There are still many opportunities to save money on your boat insurance costs. But first, it’s important to understand how your deductible works. Here’s what you need to know:
What is an insurance deductible?
Your boat insurance deductible is the amount you self-insure on a loss. In other words, it is what you pay on a claim before your coverage kicks in.
Deductibles are a standard component of insurance contracts are usually written into the policy in one of two ways:
- As a dollar amount (most common).
- As a percentage of the total policy amount.
Regardless of the deductible structure, you are agreeing to pay that amount or percentage when you sign up for a plan and your provider may contribute for damages above the applicable deductible up to the policy limit.
How do boat Insurance deductibles work?
In most cases, you can look over various plans and coverages and choose your deductible. Then, the insurance agent or underwriter will tell you how much the policy will cost based on the deductible selected and other options.
The insurer agrees to pay for damages arising from a covered loss, up to any applicable policy limit, once the deductible has been satisfied. In return, you pay an annual premium and agree to self-insure damages up to your deductible.
This protects yourself from a large, unexpected loss.
Example: An accident causes $5,000 worth of damage to your boat. If your deductible is $1,000, you will self-insure the first $1,000 and the insurance provider will pay the remaining amount, up to the policy limit.
How to choose your deductible
You can typically choose how much of a deductible you want to have.
Insurance providers will lower the overall premium amount if you carry a higher deductible. Similarly, lower deductibles will increase your annual premium.
Higher deductibles are great if you don’t have to make a claim. In exchange for saving significant money every year you are accepting more financial risk. If you do have to file a claim, you will have higher out-of-pocket costs than with a lower deductible.
That’s why it’s important to choose a deductible that you can afford . The higher amount you are willing to cover via the deductible will translate to less risk for the insurance company and vice versa. You are coming to an agreement with the insurance company, balancing the financial risk between each party.
How to save money on an insurance deductible
Adding a disappearing deductible is another great way to save on the out of pocket costs associated with a boat insurance loss.
Most insurers will offer this type of incentive program, including SkiSafe.
A disappearing deductible is an optional add-on to your policy that rewards accident-free boaters with lower insurance deductibles. The longer you go without filing a claim, the lower your deductible becomes. Depending on your policy details, it could disappear entirely.
Overall - if you select a disappearing deductible option, the cost of that deductible will become less expensive after each year of claim-free boating.
You can also change your deductible on the policy to fit your needs. For example, if you could once afford a higher one but now feel that you can’t, you can request a lower deductible