Deductibles and limits are two key components of an Allstate Business Owners Policy (BOP) that are important to understand. A deductible is the amount of money a business owner pays out of pocket toward a covered claim, while a limit is the maximum amount of money an insurance company will pay toward a covered claim.
It's a good idea to know your business policy’s deductibles and limits so you can prepare for potential out-of-pocket expenses if you need to file a claim. Keep reading to learn more about how deductibles and limits work for business owners.
A deductible is your share of the cost.
Business example: Your business is damaged after a storm, which destroys part of your owned business building and some office equipment. It will cost $20,000 to repair the damage.
Business owner has a BOP with a $500 deductible.
Business owner pays $500. Insurance pays $19,500.
Business auto example: An employee causes an accident while driving the company vehicle for work purposes. It will cost $5,000 for repairs to the company vehicle.
Business owner has a Business Auto Insurance policy with a $500 deductible for collision coverage. Business owner pays $500. Insurance pays $4,500.
It’s important to note that not all business insurance coverages have a deductible. However, a deductible will always apply to Allstate’s building and business personal property coverages. You can also typically choose your deductible from a variety of options — keep in mind that a higher deductible may mean you’ll have a lower insurance premium.
Your policy’s deductibles will be outlined in your policy declarations.
About coverage limits
Each coverage in your Allstate Business Insurance policy has a limit, which is the maximum amount of money your insurance policy will pay for a covered claim.
Business example: Your business experiences a fire that destroys a large portion of your owned business building and office equipment. It will cost $350,000 to complete all repairs.
Business owner has a BOP with a $500,000 business property coverage limit and a $1,000 deductible. Business owner pays the $1,000 deductible. Insurance pays $349,000.
Business auto example: A hailstorm damages a company vehicle. The vehicle repairs will cost $5,000. Business owner has a Business Auto policy, which includes Comprehensive coverage. There is a $500 deductible and a $10,000 coverage limit (the comprehensive coverage limit is typically equal to what the vehicle is worth).
Business owner pays the $500 deductible. Insurance pays $4,500.
You can usually increase limits for many coverages in your business insurance policy. You may also be able to add other coverages to suit your business needs. When you buy additional protection for your business personal property, it will be listed on your Allstate Policy Declarations under Coverage and Applicable Deductibles, or on an additional coverage form.
Replacement cost vs. actual cash value
The value of most of your business belongings decreases over time. With Allstate Business Insurance, your items are covered based on their replacement cost. However, in some special cases, items might be replaced based on their actual cash value.
This means your business contents are covered for the amount it would take to replace them at the time of the claim. Replacement cost works like this: First, Allstate issues you a check for the actual cash value of the item. Then, when you replace the item, you’ll receive another check for the remaining amount needed to make the purchase.
Actual cash value
This means the contents of your business are covered at their replacement cost minus depreciation. Depreciation is the decrease in the item’s value due to its age, condition or other factors.