Over the past several years, businesses in Colorado have found the cost of paying the insurance deductibles for claims of wind and hail damage to their facilities prohibitively expensive. As a result, many are choosing to buy deductible buydowns to further protect themselves financially. If this concept is unfamiliar to you, the information below should illuminate the situation.

What Is a Deductible Buydown Policy?

Lately, many Colorado insurers have instituted policies that require policyholders to pay large deductibles—in most instances, 1% to 5% of the value of the property that is insured—for wind and hail insurance claims. This means that, should they ever suffer damage and have to file a wind/hail claim, many businesses simply cannot afford the out-of-pocket costs—even though they are fully insured.

As a result, other carriers are offering deductible buydown insurance to make up the difference. It is, essentially, a second policy that covers a decided on portion of the deductible amount of the original policy.

How Does a Deductible Buydown Policy Work?

Owners and managers of commercial buildings purchase property insurance through a carrier who has instituted this high-deductible policy. Because they are still vulnerable to a significant out-of-pocket expense—namely, the deductible—the property owner approaches another insurer and requests a deductible buydown policy.

The second insurer then designs a second policy to cover a portion of the owner's potential out-of-pocket expenses. Between them, the two policies cover nearly all possible costs.

If the property suffers wind or hail damage, the owner files claims with both insurers. The first insurer covers the repairs, while the second insurer pays the policyholder's decided on portion of the deductible on the original policy.
 

To discuss the purchase of a wind and hail deductible buydown, contact Jesse Wicks of ISU Insurance Services of Colorado in Golden, CO. He is an independent broker for the oldest insurance firm in the state, which has helped businesses throughout Jefferson County for more than 135 years. He can also set you up with liability, workers' compensation, and group health insurance. Visit his website to ask questions via a secure contact form or call (303) 916-5231 to request a quote.