When to Use a Deductible Reimbursement Policy

Not every type of policy allows a person to adjust the deductible. For instance, many employer-funded health programs come with set amounts of initial out-of-pocket charges and copays. On the other hand, there is a lot of latitude for adjusting deductibles with an auto insurance policy. In this case, a policyholder may wonder if they should use a deductible reimbursement policy (DRP) to offset the deductible amount in their primary policy. Here is a method to help make this decision:


Step 1: Find the recommended deductible amount and associated premiums for the insurance policy. Then get two other quotes, one for a lower deductible and another for a higher. Record these value pairs in a spreadsheet (two columns, three rows).


Step 2: Contact a specialty carrier for a DRP quote. Get monthly premiums for each of the three deductibles from Step 1.


Step3: Add a third column on the spreadsheet with the three DRP premium values.


Step 4: Make a fourth column containing the sum of the two premium values. This is the total premium cost for “first dollar” coverage, meaning no out-of-pocket expenses. The row with the lowest total is the optimum choice.


For Large Deductibles


Some policies have very large predetermined deductibles. The insured has no way to afford the deductibles in case of an accident. In other words, they are not really protected. These cases are perfect candidates for a deductible reimbursement policy. This policy will make sure that the person can handle the deduction if an incident occurs.