Self-Insured Retention and Deductible

A retention is the amount you pay on each claim before the insurer pays anything. A deductible is similar but the insurer typically pays first and bills you back; a self-insured retention makes you pay first. Senior care programs above a certain size are almost always written with a meaningful retention, because the frequency in this class is too predictable for a carrier to want first-dollar exposure.

The retention is a financing decision that gets treated as a pricing decision. Every dollar of retention you take is a dollar you fund from operations against claims you cannot fully forecast, and the true annual cost is the retention multiplied by claim frequency, not the retention itself. An operator with several buildings and a $100K retention who has ten reported claims in a year has committed up to $1M of operating cash, entirely separate from premium. Underwriters will happily trade a lower premium for a higher retention because they know that math better than most buyers do. Model the retention against your actual five-year frequency before treating the premium saving as a saving.