Retention

Retention A mechanism of internal fund allocation for loss exposure used in place of or as a supplement to risk transfer to an insurance company. An application of retention is a declaration commonly included in insurance contracts. It specifies what portion of any potential claims would be covered by the policyholder and the insurance company, respectively. Applicability of retention; for instance, if a car insurance policy has a $1,000 deductible and a loss is valued at $2,500, then the application of retention for that policy would clarify that the policyholder is responsible for payment of the $1,000 deductible first, then insurer’s liability would thus be limited to $1,500. “Retention” and “deductible” are similar concepts, but they have distinct meanings; In Retention once the insured achieves the self-insured insured person or company is responsible for paying out of pocket before, the insurer can then take care of the remaining damage. While in Deductible policy often requires the insurer to cover your losses immediately, and then collect reimbursement from you afterward. Self-Insured Retention vs. Deductible, it will depends on your unique circumstances, needs, and goals. For example, if immediate coverage in the event of a claim is a high priority for you, then you’ll likely want to go with the deductible option. On the other hand, if you want the maximum amount of coverage after your required payments out-of-pocket, then self-insured retention may be the better choice. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful