What are Retained Limits?
Retained Limits are the financial thresholds that must be met by the insured before an insurance policy begins to pay for a claim. These limits are usually outlined in policies such as umbrella insurance, excess liability insurance, or certain business liability coverages. In practice, a retained limit acts similarly to a deductible, with the key difference being that it applies specifically to high-value claims or specialized types of insurance.
For example, in the context of an umbrella insurance policy, the policyholder may be required to pay out of pocket up to a specified retained limit before the umbrella coverage applies. This ensures that smaller claims are managed by the insured, while larger claims that exceed the retained limit are covered by the insurer.
Retained limits are common in business insurance policies, especially those dealing with high-risk industries, where policyholders might assume a certain degree of financial responsibility before tapping into broader coverage. Retained limits are less common for homeowners or auto insurance but may appear in specialized scenarios where additional liability protection is sought.