What is a deductible?

The deductible is the amount you must pay out-of-pocket before your insurance coverage begins paying for a covered loss.

What you need to know

If you have a $2,500 deductible and suffer $10,000 in fire damage, you pay the first $2,500 and insurance covers the remaining $7,500. Higher deductibles mean lower premiums but more out-of-pocket costs when claims occur.

Why it matters for restaurant owners

Choose deductibles you can comfortably afford from cash reserves without disrupting operations. Many restaurants opt for $1,000-$5,000 deductibles to balance premium savings with manageable out-of-pocket risk.

Consider higher deductibles for property coverage (where losses are less frequent but larger) and lower deductibles for liability (where claims are more frequent but less predictable). Some coverage types like flood or earthquake may have percentage-based deductibles (2-5% of coverage) that are much higher.