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What’s The Difference Between A Deductible And A Self Insured Retention?

What's The Difference Between A Deductible And A Self Insured Retention?

What’s The Difference Between A Deductible And A Self Insured Retention?

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People often ask us questions about their business insurance and one of the more common one’s is what’s the difference between a deductible and a self insured retention? Before we answer this question we just wanted to explain why deductibles and self insured retentions exist in the first place as nearly all insurance policies include one or the other. Insurance policies are intended to put the policy holder back in the position they were prior to a loss, but nearly every business insurance policy will include some method to ensure the insured participates in the loss.

Some Of The Reasons Insurers Impose a Deductible Or A Self Insured Retention

  • Discourages insured’s from submitting claims
  • Limits or reduces the amount the insurer has to pay for each claim
  • Eliminates the reporting of small claims
  • Forces the insured to have some skin in the game

So…What’s The Difference Between A Deductible And A Self Insured Retention?

Deductibles and self insured retentions are used interchangeably for all the reasons above, but there are also important differences between between a deductible and a self insured retention which become increasingly important the larger they become. The answer to the question what’s the difference between a deductible and a self insured retention is as follows is that deductibles reduce the amount of insurance available where as a self insured retention is applied and the limit of insurance is fully available above that amount.  For example a policy with a $1,000,000 limit and a $100,000 technically only provides $900,000 of insurance.  In contrast a policy with a $1,000,000 limit and a $100,000 self insured retention provides a full $1,000,000 of coverage after the claim exceeds $100,000.  Another important difference is the insurers usually handle claims from teh beginning when a deductible is applicable, but often only get involved after a claim exceeds the self insured retention.

To Discuss The Differences Between A Deductible And A Self Insured Retention? Or How To Get A Business Insurance In Canada Quote Connect With One Of Our Canadian Business Insurance Brokers Today at 1-866-287-0448 of CLICK HERE!

ALIGNED Across Canada  100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves nearly 1,400 clients across the country. As experts in delivering business insurance Canada solutions and consistently recognized as one of the best business insurance brokers in Canada, ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED business insurance brokers create, negotiate and deliver the best business insurance and risk management strategies/solutions to organizations like yours. As one of Canada’s fastest growing insurance brokerages, we invite you to learn more about us and connect @ALIGNEDonRisk, on Facebook or LinkedIn.

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