Firearms Insurance Agent Blog

Premiums, Policy Limits, and Deductibles: What’s the Difference?

When you’re shopping for business insurance, three terms will often come up: premiums, policy limits, and deductibles. These three factors can impact how much you pay for your insurance and what your policy will cover—as such, understanding what they mean is essential to finding the right business insurance.

Premiums

An insurance premium is what you pay to have insurance. In other words, your premium is your monthly (or quarterly or annually, depending on how you set it up) bill that you receive from your insurance company. How much you pay for your premium will depend on various factors, including the extent of your coverage, the insurance company, your industry, and more.

Policy Limits

Say, for example, that your business suffered damage from a recent storm. The damages total $20,000. You file a claim with your insurance, as your policy covers storm-related damages, but they only pay $10,000. This is a policy limit in action.A policy limit is the maximum amount of money that your insurance company will pay for a claim. So, because your policy limit was $10,000, your insurance only had to cover $10,000 of the total $20,000 of damages.

How much your policy limit is will depend on the type of insurance and the type of limit. There are two main types of policy limits. They are:

• Per-occurrence limits: These specify the maximum amount of funds your insurance will cover for one specific incident.
• Aggregate limits: These specify the maximum amount of funds your insurance will cover during your policy period.

Deductibles

Finally, there are deductibles. A deductible is how much you will pay out-of-pocket before your insurance steps in to cover the rest. In other words, if you have a $1500 deductible and you file an insurance claim, then the most you will pay is $1500. The deductible will then reset once you begin a new policy period.

Premiums, policy limits, and deductibles can impact how much you pay out-of-pocket just to protect your business. At Firearms Insurance Agent, we can help you find an insurance plan with the most advantageous premiums, policy limits, and deductibles. Contact us today to learn more!