Definition

The portion of loss you agree to pay yourself before insurance covers the rest. Retaining some risk can lower your premiums while still providing protection.

What to consider

  • Know the amount you must pay out-of-pocket.
  • Ensure you can cover the retention in case of a claim.
  • Assess how this affects your overall financial risk.

Real world scenarios

  • A company opted for a self-insured retention, meaning it pays a set amount before insurance coverage kicks in.
  • An entrepreneur chose a plan with a high self-insured retention to lower premium costs.
  • A business used self-insured retention as part of its risk management strategy.

Related terms

Insurance & Financial Protection