If you’re depending on a commercial general liability (CGL) policy for insurance coverage, you need to be aware that a self-insured retention can really make your life difficult. Somewhat similar to a deductible, a retention is an amount of expense the insured has to reach before the insurance policy will begin paying the bills. The problem is, often the retention is as much or more than the amount the policy is willing to cover.
Self-insured retentions are pretty common these days, and even though CGL policies are understood to be primary coverage, they often find their way into a general liability policy nonetheless. What it means for additional insured parties is that you may not be covered in the event of a liability, much like paying for a doctor’s visit if you haven’t met your deductible yet (the difference being that liabilities are much more expensive than check-ups).
What to do About Self-Insured Retentions
If you want to avoid having to pay for liabilities all by yourself, you need to be asking questions. In the event you can catch it before the policy is finalized, be sure to discuss self-insured retentions with the primary insured, and how it could hurt both their business and yours. Ask them to choose a policy that will more appropriately cover the both of you.
For policies that are already in place, don’t assume that CGL is going to cover you without investigating for yourself. Ask to read the policy yourself, if you can. It’s best if you can get an idea of what you’re dealing with. Then, if you find that you won’t be covered adequately by the CGL, get yourself some coverage of your own. While it may be an expense you weren’t planning for, it is much better to be safe than sorry in this case.
Insurance is a complicated business, but if you’re willing to do your research, you can protect yourself from the various pitfalls. If you’re looking for some help in that regard, there are insurance credentialing experts who can help. Don’t be afraid to reach out for their assistance.