The lowdown on a deductible vs self insured retention…
Knowledge is power. That’s why we’re continually bringing new and useful insurance insights to commercial insurance buyers through our blog. Featuring 1,000+ insights, we’re constantly adding content. Insurance insights like this article are just one way we’re delivering a different and better experience.
People often ask us about the details of commercial insurance options. Here’s a synopsis about how insurance deductibles differ from self-insured retention as explained in a recent Canadian Underwriter article:
“A “self-insured retention” [SIR] is effectively the same thing as a deductible in a contract triggered by an insurer’s duty to defend, an Ontario court has ruled in a case involving an agreement between an elevator contractor and the building owner/property manager. “Even if the SIR is not technically a deductible, they are obviously similar and functionally related,”1Canadian Underwriter: What’s the difference between a “self-insured retention” and a deductible?
“A self-insured retention is an amount than an insured retains and covers before insurance coverage begins to apply.”2
Contact us to get expert guidance in all your commercial insurance matters
It’s the intent that matters…
Deductibles vs self-insured retention. Insurance policies are intended to put the policyholder back in the position they were prior to a loss or claim situation. This being said, nearly every business insurance policy will include some method to ensure the insured participates in the loss or claim.
4 reasons why | Deductibles or self-insured retention…
An insurance company may choose to impose a deductible or a self-insured retention on a policy. Here are some reasons why:
- Limits or reduces the amount the insurer has to pay for each claim
- Discourages insured’s from submitting claims
- Forces the insured to have some skin in the game
- Eliminates the reporting of small claims
So, what’s the real difference?
Deductibles and self-insured retentions may be used interchangeably for all the reasons above. There are also some important differences. These become increasingly important the larger the amounts become.
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. Specifically…
Related Matters: How deductibles & self-insured retention differ…
ALIGNED brokers understand the nuances of commercial insurance coverages and can help you make informed decisions about your business insurance options. Bookmark our insurance info blog to keep current with Canadian insurance insights.
We’re here to help you find the BEST commercial insurance…
Our team of insurance brokers is available to help answer any and all questions you might have about all of our commercial insurance products. If you have a question about business insurance, are uncertain about what a particular coverage term means, or simply want to find commercial insurance that directly aligns with your needs, don’t hesitate to call us toll-free at 1-866-287-0448.
Sources: 1,2 Canadian Underwriter: What’s the difference between a “self-insured retention” and a deductible?
It’s time to get your insurance aligned. Want Canadian business insurance that’s ALIGNED with your bottom line? We can help. 365. Call us toll-free at 1-866-287-0448.
We’re ALIGNED across Canada. The ALIGNED Insurance National Operations Centre in Cambridge, Ontario supports our Toronto, Calgary and Vancouver offices. We’re proud our industry peers consistently recognize ALIGNED Insurance as one of the best insurance teams in the country. We are also very proud to be one of the fastest growing insurance brokerages in Canada.
We deliver e-news you can use. Get practical business insurance insights in your inbox. 12,000+ people subscribe to our free ALIGNMENT Matters e-news. Just click the JOIN OUR DISTRIBUTION LIST button – at the bottom of our homepage – to connect and learn more about us.
365 | Get ALIGNED. Every day, Canadian business leaders follow our insurance insights via @ALIGNEDonRisk, on Facebook, LinkedIn and watch our YouTube videos here!