Waiting Period Deductible
What Does Waiting Period Deductible Mean?
A waiting period deductible is a provision in an insurance contract that specifies a period during which the policyholder must cover the cost of care or loss before the insurance benefits take effect. Insurers use this to avoid small claims and promote responsibility among policyholders. Waiting period deductibles are commonly applied in business interruption insurance and disability policies.
Insuranceopedia Explains Waiting Period Deductible
Many business interruption insurance policies include a 72-hour waiting period deductible, meaning payments from the policy begin only after this initial period. Since the first one to three days following a business interruption is often the most crucial, the waiting period encourages the insured business to take immediate action, such as repairing property or addressing other issues, to restore normal operations. During this waiting period, the insurer does not cover the policyholder’s lost profits, effectively making it a deductible.
In the case of disability insurance, benefits are typically not paid unless the policyholder remains disabled beyond the specified period. This waiting period deductible is often referred to as an elimination period deductible.
