Contractor Insurance Deductible Options

Deductible vs. self-insured retention

With a deductible, the insurer handles and pays the claim, then collects the deductible from you. With a self-insured retention (SIR), common on some contractor GL policies, you pay the claim — and sometimes defense — up to the retention before the insurer steps in. An SIR can require you to handle small claims yourself.

Where deductibles apply

• General liability — often none, or a per-claim deductible or SIR on higher-risk trades.
• Commercial auto — deductibles on collision and comprehensive for your own vehicles.
• Tools and equipment (inland marine) — a per-loss deductible.
• Builder's risk — a per-occurrence deductible, sometimes higher for water or earthquake.
• Workers' comp — generally no deductible for small contractors in California.

A quick comparison

Suppose a customer's floor is damaged and the claim settles for $6,000. With a $1,000 GL deductible, the insurer pays and adjusts the claim, then bills you $1,000. With a $5,000 SIR, you pay the first $5,000 and may have to handle the claim yourself before the insurer pays the remaining $1,000.

Questions to ask before you choose

• Is it a deductible or an SIR, and does it apply to defense costs?
• Is it per claim or per occurrence?
• Does the contract with my GC limit the deductible I can carry?
• What deductible applies to water damage, theft or earthquake on equipment and builder's risk?
• How much could I comfortably pay on short notice?

Choosing the right one

A higher deductible usually lowers the premium, but only makes sense if you can pay it on a bad day. Check whether contracts limit how high your deductible can be, and whether your GC expects you to cover their share of a claim.

Asena Capital Insurance Services compares multiple markets for California contractors and requests additional insured endorsements for you when a contract calls for them. Call (858) 925-9555 or request a quote — only your name, phone and email are required. CA License #6008596.

Frequently asked questions

Is a deductible the same as an SIR?

No. With an SIR you pay the claim up to the retention yourself; with a deductible the insurer pays and bills you back.

Does workers' comp have a deductible?

Small contractors in California generally don't have one.

Will a higher deductible lower my premium a lot?

It lowers it somewhat; the savings depend on the line of coverage and your claims history. The bigger question is whether you can pay the deductible after a loss.

Can a GC require a maximum deductible?

Yes. Some contracts cap the deductible or SIR a subcontractor can carry.