Is self-insured retention the same as a deductible?
The answer to the question what's the difference between a deductible and a self insured retention is that deductibles reduce the amount of insurance available whereas a self insured retention is applied and the limit of insurance is fully available above that amount.
What is self-insured retention?
Self-insured retention (SIR) is a self-insurance mechanism used by some organizations to manage their insurance costs. Under a liability insurance policy with a SIR provision, the business must cover a set dollar amount before the insurance company begins to pay out claims.
Is retention another word for deductible?
There are important legal distinctions between retentions and deductibles, but they are beyond the scope of this article. Suffice it to say that both retentions and deductibles are loss-shifting mechanisms, which shift away from the insurer a portion of the loss otherwise covered by an insurance policy.
What does retention mean on an insurance policy?
Retention — (1) Assumption of risk of loss by means of noninsurance, self-insurance, or deductibles. Retention can be intentional or, when exposures are not identified, unintentional. (2) In reinsurance, the net amount of risk the ceding company keeps for its own account.
What is the difference between a retention and a deductible?
The answer to the question what's the difference between a deductible and a self insured retention is that deductibles reduce the amount of insurance available whereas a self insured retention is applied and the limit of insurance is fully available above that amount.
Are liability deductibles and self-insured retentions the same thing?
Liability deductibles and self-insured retentions are often used in commercial casualty insurance. Both are types of self-insurance. They enable policyholders to retain some of the risk of losses in exchange for a lower premium. While they serve similar purposes, liability deductibles and self-insured retentions (SIRs) are not the same thing.
What is self-insured retention?
One definition for self-insured retention is: “a specific dollar amount in a liability insurance policy. Before the insurance policy can take care of any damage, defense or loss, the insured needs to pay this clearly defined amount. Once the insured achieves the self-insured retention limit, the insurer can then take care of the remaining damage.”