Deductibles: Controlling Risk and Cost
At its core, insurance is simply a method to transfer risk. With insurance you can transfer the cost of damage to your property, medical costs for employees and everything in between. But, it’s also important to consider how much risk you are willing to take – and when you’re a manufacturing company, there’s plenty of risk! By choosing the deductibles that are right for you, you can both control how much risk you hold and how much you pay for insurance.
However, cost shouldn’t be the only concern when choosing deductibles. Instead of just raising deductibles across the board, it’s important to focus on those areas where you have higher or lower risks, and carefully chose deductibles accordingly. Doing so puts you in a better position to respond to potential losses and helps your bottom line stay in check.
The premium you save by choosing the right deductibles can also help you further reduce insurance costs. For example, those funds can be re-invested into safety and risk management programs. These programs reduce the overall risk of your business, resulting in premium discounts and positive loss history.
A careful look at your insurance program can reveal areas where simply amending deductibles can help you create a more responsive risk program, save you money or both. With the right reinvestment and risk management strategy these savings can be leveraged to further control both risk and cost.
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