Deductible Buyback Calculator

Deductible buyback converts large deductible to first-dollar coverage.

Standard deductible

Claim probability %

Expected claim

Buyback premium

Net expected savings

$7,000

Expected claim cost

$15,000

Break-even premium

$15,000

How the math works

Expected claim = claim × probability. Net savings = expected − premium.

$100k × 15% = $15k expected − $8k premium = $7k net expected savings.

How to Use

Enter standard deductible.
Enter expected claim probability %.
Enter expected claim amount.
Enter buyback premium.
Read expected net savings.

Frequently Asked Questions

Buyback mechanics?

Separate insurance policy reduces deductible from $100k to $10k (or $0). Primary carrier pays above buyback, buyback insurer pays below. Premium typically 25-80% of deductible saving. Best for predictable risks.

Economic math?

Deductible $250k. Claim probability 10%/yr. Expected claim $250k × 10% = $25k. Buyback premium $15k/yr. Net expected savings: $10k/yr. Attractive if premium < expected claim × probability.

Risk transfer?

Converts uncertain expense into certain premium. Cash flow predictability. Insurer absorbs claim volatility. Lender may require (covenants). Useful for frequent/small risks. Large/catastrophic risks usually retained.

How do insurance carriers view this?

Insurance carriers underwrite per-peril and often stack deductibles — named storm, wind, hail, flood, and standard can all apply separately on a single event. Confirm with your broker which deductibles actually apply to your policy and stress-test liquidity against the highest applicable deductible. Endorsements and riders can modify base terms; read declarations carefully and keep a written summary on file for claim time.