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🏗️ '''Large deductible plan''' is a [[Definition:Risk financing | risk financing]] structure, most often used in [[Definition:Workers' compensation insurance | workers' compensation]] and [[Definition:General liability insurance | general liability]] programs, where the [[Definition:Policyholder | insured]] assumes a substantial per-occurrence [[Definition:Deductible | deductible]] — frequently ranging from $100,000 to $1 million or more — while the [[Definition:Insurance carrier | carrier]] issues a full-limit [[Definition:Insurance policy | policy]] and handles [[Definition:Claims management | claims administration]], regulatory filings, and loss adjusting. Unlike a [[Definition:Self-insured retention (SIR) | self-insured retention]], the insurer pays losses from the first dollar on behalf of the insured and then seeks [[Definition:Reimbursement | reimbursement]] for the deductible portion, which keeps the insurance mechanism visible to [[Definition:Insurance regulator | regulators]] and [[Definition:Claimant | claimants]].

⚙️ The mechanics hinge on a reimbursement obligation: the carrier settles claims as they arise and invoices the insured for amounts within the deductible layer. To protect against the insured's potential inability to reimburse, the carrier typically requires [[Definition:Collateral | collateral]] in the form of [[Definition:Letter of credit | letters of credit]], [[Definition:Trust fund | trust funds]], or [[Definition:Surety bond | surety bonds]]. The [[Definition:Insurance premium | premium]] the insured pays covers the carrier's [[Definition:Expense loading | expense loads]], [[Definition:Excess loss | excess-layer]] exposure above the deductible, and a risk charge for credit exposure. [[Definition:Loss-sensitive program | Loss-sensitive]] features such as retrospective adjustments may be layered in, and [[Definition:Aggregate deductible | aggregate]] caps can limit the insured's total outlay in a catastrophic year. The structure essentially positions the insured as the primary risk-bearer for attritional losses while preserving the carrier's infrastructure for claims handling and [[Definition:Statutory compliance | statutory compliance]].

💰 Organizations gravitate toward large deductible plans when they have the financial strength to absorb predictable losses and want to reduce premium expenditure compared to guaranteed-cost programs. The arrangement rewards proactive [[Definition:Loss control | loss control]] and [[Definition:Safety program | safety programs]] because every dollar saved within the deductible flows directly to the insured's bottom line. It also offers significant [[Definition:Cash flow | cash flow]] advantages, since deductible reimbursements are paid as claims develop rather than upfront as premium. For mid-to-large employers, particularly in manufacturing, construction, and transportation, the large deductible plan occupies a practical middle ground between fully insured programs and the administrative complexity of a formal [[Definition:Self-insurance | self-insurance]] arrangement.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Self-insured retention (SIR)]]
* [[Definition:Workers' compensation insurance]]
* [[Definition:Loss-sensitive program]]
* [[Definition:Collateral]]
* [[Definition:Retrospective rating plan]]
* [[Definition:Guaranteed cost policy]]
{{Div col end}}

Definition:Large deductible plan - Revision history

PlumBot: Bot: Creating new article from JSON