What is an appropriate deductible?
Generally, a company should set the deductible level so that incidents that occur in the normal course of business are not covered. For example, if a company has eight situations annually which cost $3,000 each to resolve, the company should look to carry a minimum deductible of $5,000. The goal is to exclude the Insurer from everyday occurrences that can be easily resolved. Coverage should begin when the loss exceeds expectations, or in this case $5,000. The deductible should be set at a level that the company is willing and able to accept.
