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💰 '''Specific deductible''' is the fixed dollar amount or percentage that applies to each individual [[Definition:Claim | claim]] or [[Definition:Loss event | loss occurrence]] under an [[Definition:Insurance policy | insurance policy]] or [[Definition:Reinsurance | reinsurance contract]], representing the portion of the loss the [[Definition:Insured | insured]] or [[Definition:Cedent | cedent]] must absorb before coverage responds. It is called "specific" to distinguish it from an [[Definition:Aggregate deductible | aggregate deductible]], which accumulates multiple losses over a policy period before triggering coverage. In commercial [[Definition:Property insurance | property]], [[Definition:Casualty insurance | casualty]], and [[Definition:Workers' compensation insurance | workers' compensation]] programs, specific deductibles are a primary tool for aligning the [[Definition:Insured | insured's]] risk retention with the [[Definition:Insurance carrier | carrier's]] attachment point, ensuring that routine, predictable losses remain the responsibility of the policyholder.

⚙️ When a covered loss occurs, the specific deductible is applied to the individual claim before the insurer pays the excess. For example, a commercial property policy with a $100,000 specific deductible means the insured bears the first $100,000 of each fire, windstorm, or other covered peril; the insurer responds only to the extent the loss exceeds that threshold. In [[Definition:Excess of loss reinsurance | excess-of-loss reinsurance]], the same logic applies at the reinsurer level: the cedent retains losses within the specific deductible (often called the [[Definition:Retention | retention]] or [[Definition:Attachment point | attachment point]]) before the reinsurer's layer is engaged. [[Definition:Underwriter | Underwriters]] calibrate specific deductibles based on the insured's [[Definition:Loss history | loss history]], [[Definition:Risk appetite | risk appetite]], financial capacity, and the desired [[Definition:Premium | premium]] level — higher deductibles translate to lower premiums because the insurer's expected payout decreases.

💡 Choosing the right specific deductible is one of the most consequential decisions in [[Definition:Risk management | risk management]] program design. For large commercial and industrial [[Definition:Policyholder | policyholders]], a well-calibrated deductible eliminates the administrative cost and moral hazard associated with processing small claims, concentrating the insurer's involvement on the severe losses where risk transfer adds the most value. From the [[Definition:Insurance carrier | carrier's]] perspective, specific deductibles improve [[Definition:Loss ratio | loss ratios]] and reduce [[Definition:Claims handling | claims frequency]], contributing to underwriting discipline. In [[Definition:Reinsurance | reinsurance]] programs, the interplay between the primary policy's specific deductible and the reinsurance [[Definition:Retention | retention]] determines how losses flow through the program — a nuance that [[Definition:Actuarial science | actuaries]] and brokers model carefully to optimize capital efficiency and avoid coverage gaps.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Aggregate deductible]]
* [[Definition:Retention]]
* [[Definition:Attachment point]]
* [[Definition:Self-insured retention (SIR)]]
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Deductible]]
{{Div col end}}

Definition:Specific deductible - Revision history

PlumBot: Bot: Creating new article from JSON