Definition - What does Retention Deductible mean?
A retention deductible is a clause in an umbrella insurance policy which declares that the deductible will apply for losses for which there is no underlying policy that provide coverage for the specific loss. The specific umbrella policy will dictate exactly how much money the policyholder will have to spend on the deductible.
Insuranceopedia explains Retention Deductible
Although a retention deductible comes into play when there is no underlying, primary policy covering the loss in question, the umbrella policy will provide coverage once the deductible is paid. So, the policyholder will still be reimbursed for covered losses and can still prevent suffering a financial disaster in the event of a major loss.
Retention deductibles also help insurance companies by saving them a small amount of money when paying out umbrella insurance claims.
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