What happens to the deductible if a business personal property loss exceeds its limit?

In the context of insurance, the deductible functions as the amount that the policyholder agrees to pay out of pocket before the insurance coverage kicks in for a loss. When a business personal property loss occurs and exceeds the coverage limit, the deductible is still applied to the loss as it directly relates to the specific business personal property claim.

The rationale behind this is that the deductible is established to share the risk between the insurer and the insured. Thus, even when the loss surpasses the coverage limit, the initial calculation involves applying the deductible to the amount of loss being claimed up to that limit. The total payout from the insurance will then be calculated based on the maximum limit of coverage minus the deductible amount, while the insured would bear the responsibility for any amounts exceeding that limit after the deductible is applied.

Understanding this principle is important as it reinforces the overarching structure of insurance contracts, where deductibles serve to prevent small claims and reduce the overall premium costs while still requiring policyholders to absorb part of the loss.