A self-insured retention is an important and often misunderstood component of a policy. An organisation and an insurer both have an interest that it is set in an appropriate amount so that coverage can function as intended. If implemented correctly, it will encourage them to participate in what is a mutually beneficial relationship.
In this article, we will explore the concept of a self-insured retention within the context of the following coverages:
- Directors and officers liability insurance
- Employment practices liability insurance
- Management liability insurance
- D&O insurance for nonprofits
You may also find that similar concepts apply to a broad range of financial lines insurances, such as professional indemnity insurance, cyber insurance, and even crime insurance to a certain extent. Keep in mind, however, that each policy is strictly interpreted according to its own terms and conditions.
Contents
1 Self-insured retention: A definition
2 When does a self-insured retention apply?
3 The purpose of a self-insured retention
4 Applying a self-insured retention to claims
5 Selecting a self-insured retention
6 What type of self-insured retention can be expected?
7 How do defence costs interact with a self-insured retention?
8 Benefits of a correctly implemented self-insured retention
9 Self-insured retention: An example
10 Conclusion
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