A deductible reduces the insurer's payment by a stated amount per claim or occurrence. Unlike a self-insured retention, the insurer typically handles and pays the claim in full and then seeks reimbursement from the insured.
Deductibles may apply to indemnity only or to indemnity and defense costs combined.
Alternative Names:
Policy Deductible, Loss Deductible
Why it Matters?
The distinction from a self-insured retention determines who controls the defense, which matters more than the dollar amount. Under a deductible the carrier ordinarily selects counsel and directs strategy from the outset, while an SIR frequently leaves control with the insured until exhaustion. Large deductible programs also carry collateral requirements, since the carrier bears credit risk on reimbursement.
Frequently Confused with
Related terms
Frequently asked questions
How does a deductible differ from a self-insured retention?
Do deductibles apply to defense costs?
