NYC Insurance Blog

What are Insurance Premiums, Policy Limits and Deductibles?

Buying the right insurance coverage can be difficult, especially if you don't understand certain terms. Understanding basic insurance terms can make the difference between choosing the right coverage and paying thousands of dollars for coverage you don't need. Before you start shopping around for an insurance policy, take your time to understand the following insurance terminologies:

Premiums

An insurance premium is the actual cost of your insurance plan. The higher the premium, the higher the coverage. There are numerous options for paying your insurance premium, i.e., regular, single, and limited payments. It is crucial to pay your insurance premium when it is due to continue enjoying the coverage. If you encounter financial problems and fail to pay the premium before the due date, the insurer gives you a grace period. If you are still unable to make the payments after the grace period, your insurance policy is terminated. To protect your business, always make premium payments on time.

Insurance premiums payments vary depending on various factors. The mode or frequency of paying premiums can be:

• Regular payment – payments are made regularly throughout the policy term. Regular premium payments can be monthly, quarterly, half-yearly, or annually.
• Limited payment – premium payments are made for a limited period, i.e., a certain number of years, for example, five, ten, or twenty.
• Single payment – one payment (lump sum) is made for the entire insurance plan.

The following factors determine insurance premiums:

• Type of insurance
• Business location
• Type of business
• Preferred insurance deductible
• Additional coverage
• Business revenue
• Business assets
• Insurance history
• Insurance policy limits
• Total coverage

Research thoroughly and seek professional advice to choose the right business insurance coverage. You can customize your business owner's insurance to suit your needs and budget. For advice on insurance premiums, or to shop your current insurance around for a lower premium, call us today!

Policy Limits

Policy limit refers to the maximum amount of money an insurance company will pay for claims on each type of coverage in your insurance policy. It is crucial to consider the insurance company's minimum and maximum coverage. Always consider your policy limit if you have a worst-case scenario. Upon selecting your policy limit, the insurer calculates the deductibles and premiums. There are different types of policy limits to choose from depending on your budget and coverage needs. Common policy limit examples include per occurrence, per person, combined, aggregate, split and special limits. Please familiarize yourself with these limits because they vary from one insurance coverage to another.

Deductibles

An insurance deductible refers to the amount of money you pay towards an insured loss. The higher the deductible, the lower the premium. Insurance deductible can be an exact amount or percentage of the total insurance coverage. To know your deductible, check the terms of your insurance coverage on the declaration page (front page). A deductible is a form of risk sharing between you, your insurer, and the policyholder. You are required to pay the deductible before your insurance policy kicks in. Understanding deductibles can help you get the most out of your insurance policy.

Understanding different insurance terminologies can help you find an insurance plan that fits your needs and budget. Compare insurance policies and insurers to get the best coverage. If you have any questions, seek professional advice from an experienced insurer. Give us a call Today! Allow us to become your Agent, and help you understand all your insurance terms and get you a quote today!

---