Accidents can happen anywhere, anytime, and more fleets have been forced to raise their deductible to help maintain affordable premiums. Deductible buydown insurance has become a popular solution to help fleets and OO’s manage their costs.
Donny Cunha, Partner, and Account Executive at JDIMI said, “I think you with find buydown will become more of a necessity as some insurance carriers are moving deductibles from $5000 to $10,000 on fleets with newer, high valued equipment.” He continued, “The impression we are getting is that $5K deductibles may soon become obsolete.”
Today, most O/O’s don’t have $10,000 or $15,000 laying around. As a result, deductible buydown sales has increased substantially over the last year.
Without the money to cover the deductible, an O/O will need to borrow the money from a line of credit, put it on their credit card (with high interest), or they may need to ask the fleet to loan them the money. The latter puts the entire risk back to the fleet. If an O/O has to borrow money, the cost of borrowing can sometimes come at a higher cost than actually purchasing deductible buydown insurance. Premiums are tax-deductible and depending on the deductible amount can be very affordable.
I have also heard of a few cases where an O/O left their fleet after an accident, sticking the fleet with the entire deductible. Although most fleets have a holdback, the amounts held typically only cover off the costs of outstanding fuel and some other expenses that the O/O may owe the fleet.
“Offering a deductible buydown program through settlement deduction is a good business decision for both the O/O and their fleet,” says Avi Goldberg, Senior Vice President and National Practice Leader, Transportation, Marsh JLT. “Having flexible deductible options is also a great way for a fleet to attract new O/O’s,” Goldberg added.
The best solution, of course, would be if the O/O can bank enough money to cover off the full deductible. Unfortunately, that isn’t always the case, which makes a buydown program a viable risk management solution for many.
1) Who needs Deductible Buydown?
2) What does Buydown cover?
3) How do you make a claim?