Do you know the difference between a deductible and a retention? If not, I have good news for you. This article will clear up all of the confusion and send you on your way to make a good decision and not let anymore of your $100 bills go down the drain.
As we continue our series on the basics of professional liability, the next logical step is to talk about deductibles and retentions. While the terms are often used by agents and insurers interchangeably, the truth is that there is a pretty significant difference between the two, and knowing the difference is definitely to your advantage.
Many people know what a deductible is because they have had experience with it in their own lives with either their home owner's insurance or their personal auto policy. However, it doesn't necessarily work the same in a third party coverage. A deductible is basically the amount of a claim that you are responsible for before a carrier begins to pay any money. More formally defined, the deductible is the amount specified in an insurance policy that is subtracted from a loss in determining the amount of insurance recovery. In third party liability, typically a carrier will pay the claim amount on your behalf and then bill you back for the deductible. It does not always work this way, but most of the time it does. Therefore, having a deductible can be a cash flow advantage to your organization.
As we continue our series on the basics of professional liability, the next logical step is to talk about deductibles and retentions. While the terms are often used by agents and insurers interchangeably, the truth is that there is a pretty significant difference between the two, and knowing the difference is definitely to your advantage.
Many people know what a deductible is because they have had experience with it in their own lives with either their home owner's insurance or their personal auto policy. However, it doesn't necessarily work the same in a third party coverage. A deductible is basically the amount of a claim that you are responsible for before a carrier begins to pay any money. More formally defined, the deductible is the amount specified in an insurance policy that is subtracted from a loss in determining the amount of insurance recovery. In third party liability, typically a carrier will pay the claim amount on your behalf and then bill you back for the deductible. It does not always work this way, but most of the time it does. Therefore, having a deductible can be a cash flow advantage to your organization.
