Self-Insured Retention
Key Takeaway
The amount the insured must pay out of pocket before the insurance policy begins to respond. Unlike a deductible, which is typically applied after the insurer pays and then seeks reimbursement, a self-insured retention must be satisfied before the insurer has any payment obligation, including defense costs in most policies..
Definition
The amount the insured must pay out of pocket before the insurance policy begins to respond. Unlike a deductible, which is typically applied after the insurer pays and then seeks reimbursement, a self-insured retention must be satisfied before the insurer has any payment obligation, including defense costs in most policies.
Why This Matters for Law Firms
This term defines the boundaries of what your insurance will and will not pay for. Law firms that misunderstand coverage terms risk discovering gaps in protection only after a claim has been filed, when it is too late to remedy the situation. Reviewing these terms with your broker before binding coverage is a critical risk management step.
Example Usage in Context
During a coverage review meeting, the firm administrator might note: "Our policy includes a self-insured retention provision -- let's make sure we understand exactly what that means for our specific practice areas before we sign off on the renewal."
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