Premium
What Is an Insurance Premium?
An insurance premium is the amount you pay, monthly or annually, to keep your policy active and stay covered. Think of it like the price of your policy.
What It Means for You
Just like you’d pay a monthly electric bill to keep your lights on, an insurance premium is the bill you pay to keep your business protected. This means:
- You might lose coverage if you don’t pay your premium
- It is not the same as a deductible, limit, or claim payout
- Knowing your premium helps you budget for business expenses
- It helps you compare prices between insurance companies
What Does an Insurance Premium Cover?
An insurance premium covers the cost of having insurance — not the cost of a claim. If an accident happens and you need to pay for the damages, that’s what your policy (the thing you are paying for) is there to help with.
Paying a premium for insurance doesn’t guarantee every claim will be covered. Your policy’s terms, limits, and exclusions still apply.
How Are Insurance Premiums Paid?
Insurance policy premiums are paid on a schedule. The two most common ways insurance premiums are billed are:
- Monthly: Paid once a month to make coverage more budget-friendly
- Annually: Paid once for the full year to help simplify billing (and often with a discount when you pay up front)
Missing a payment can affect your coverage, so it’s important to know when your premium is due. Setting up automatic payments can help you keep your premiums paid.
What Affects an Insurance Premium?
The cost of an insurance policy premium can be affected by your:
- Business type: Some services are riskier than others
- Coverage limits: High limits often mean paying a higher premium
- Coverage options: You normally pay more for more protections
- Underwriting: Your insurer’s risk review can influence the price they charge
When comparing insurance providers, the lowest premium may not be the best value. A low premium might mean you have a high deductible or that there isn’t enough coverage to fully protect your business.
Is a Premium the Same as a Deductible or Policy Limit?
No. A premium is what you pay to have coverage, while a deductible is the amount you pay out of pocket for a claim before your coverage applies.
Premiums and deductibles are paid by you, but the policy limit is the most your policy (aka your insurer) can pay for a covered claim.
Pro tip: Not all insurance policies have a deductible, but they do all have premiums. In some cases, choosing a policy with a high premium can keep your deductible low.
Why Do Premiums Matter for Pet Care Businesses?
Not all pets are created equal, and neither are pet business insurance policies. Pet care professionals often compare policies based on price, but it’s also essential to know:
- What the premium includes (ex: cost of coverage, membership fees, etc.)
- Whether the included coverage matches your business
- That a lower cost can mean reduced protection
When it comes to insurance, knowing what you’re paying for helps you choose protection that fits your budget and your coverage needs.
Big Takeaway
An insurance premium is what you pay for an insurance policy. Understanding what it covers can help pet professionals compare costs and coverage options more confidently, rather than chasing the lowest price.
Keep Sniffing Around
- Deductible
- Limit of insurance
- Claim
- Policy period
- Underwriting
Jeremy Sheehy | Program Manager
Jeremy Sheehy is a Program Manager for Pet Care Insurance. His experience spans claims and commercial underwriting, and he holds a bachelor's degree from the University of Texas at Arlington along with the Chartered Property Casualty Underwriter (CPCU) designation. Jeremy believes the best insurance solutions are specialized and transparent, built through adaptability, attention to detail, and a team-first approach. He relishes helping small business owners find coverage that's both affordable and tailored to their individual needs.
Jeremy Sheehy is a Program Manager for Pet Care Insurance. His experience spans claims and commercial underwriting, and he holds a bachelor's degree from the University of Texas at Arlington along with the Chartered Property Casualty Underwriter (CPCU) designation. Jeremy believes the best insurance solutions are specialized and transparent, built through adaptability, attention to detail, and a team-first approach. He relishes helping small business owners find coverage that's both affordable and tailored to their individual needs.