Waiting Period Deductible

Definition - What does Waiting Period Deductible mean?

A waiting period deductible is a provision in an insurance contract that specify a length of time during which the policyholder must shoulder the cost of care or loss before benefits kicks in. Insurers use them to eliminate small claims and encourage responsibility. Commonly, it is applicable in business interruption insurance as well as disability policies.

Insuranceopedia explains Waiting Period Deductible

Many business interruption insurance policies implement a waiting period deductible 72 hours before policy payments can begin. Since the first one to three days after business interruption is the most critical time, a waiting period ensures that the insured business or policyholder takes the appropriate steps and measures to mitigate any issues and replace or repair property as needed to return to normal operations. As the insurer does not pay for the policyholder's losses in profits during this waiting period, it is then considered a deductible on the part of the policyholder.

As for disability insurance, many policies do not pay out any benefits unless the policyholder is disabled for longer than the specified period. In this case, a waiting period deductible is often also known as an elimination period deductible.

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