Insurance Deductible Buy-Down programs - 5 Things to Know

[Matt Moylan]

Part 1 of 5: What is a Deductible Buy-Down Program

Deductible Buy-Down programs are insurance policies a business/real estate investor can implement in their protection plan to lower the amount of deductible they have to pay when there is a claim made.

These are policies which are in addition to the normal coverage plan (property, liability, auto, umbrella, cyber, etc.)

Part 2 of 5: How Buy-Down Programs Work

They are one of many ways a person/business can implement alternative insurance protection.

Buy-Downs are added to protection plans to lower out of pocket expenses for the insured at the time of loss (a claim)

Example of how a Buy-Down program works:

• You have a commercial property portfolio.
• Its insurance policy has a deductible and a premium. (let’s say your deductible is $25,000).
• To add a buy-down program to your protection you would look to max your policy deductible (typically to $100k, $500k, or $1MM), which will decrease your premium.
• The Buy-Down program deductible could stay the same or decrease from than the original $25,000.
• The program provides coverage from your buy-down deductible up to your new regular policy deductible.
• The program would be an additional cost, but ideally would save money OR keep costs the same while lowering out of pocket expenses.

Part 3 of 5: Who has access to Deductible Buy-Down programs?

There are two answers:

1) Business’ & Real Estate Investors (who invest in commercial OR have a large # of units)

2) Insurance Brokers

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1) These programs are aimed toward clientele who own property and want to decrease the amount of out of pocket expenses when there is a claim. Any business which owns property or real estate investors, could look into implementing a program to help the efficiency of their asset protection and business plan

2) Only insurance brokers have the availability to provide programs. The “big” companies or those which you can sing the jingle to/see marketing on TV all the time, likely don’t have these types of insurance solutions in their product suite.

Part 4 of 5: Why you should include Deductible Buy-Down Programs in your insurance policy program.

There are many different reason to consider adding one, or multiple buy-down programs to your insurance protection plan.

These are not all the reasons your business should consider implementing a buy-down program, BUT will give you a good understanding of who should seriously consider.

1) You have a number of properties in close proximity

2) Having a lower deductible is a priority for you

3) Wanting to look at ways to cut premium costs

4) If your insurance company is requiring you carry a substantially high regular deductible on your policy

Part 5 of 5: types of Deductible Buy-Down Programs

There are many buy-down programs available to implement into your insurance protection plan.

Depending on your business, the “best” program may not be in the list below, but the list is what I have seen more often.

• Wind
• Hail
• Earthquake
• Flood
• Hurricane

These programs are the most common programs I have seen, BUT that doesn’t mean they’re the best out there or right for you. I suggest you consult with your broker. If your broker doesn’t know what these are OR you currently work with a direct writing company (the big name/single insurance company’s), I’m happy to provide you details about various programs.

Who has used or currently uses buy-down programs in their protection plan?