What does Basket Deductible mean? Read on to discover the definition & meaning of the term Basket Deductible - to help you better understand the language used in insurance policies.
A basket deductible is a single retained limit designed to fund losses from multiple risks. For example, property and general liability represent entirely different loss exposures. The traditional (and still most prevalent) method of allocating these risk between retention (deductible) and transfer (insurance) is through individual risk silos wherein each risk is evaluated separately without regard for the other. A basket deductible combines the risk profiles of each exposure into one retained amount. Theoretically, since the risks are totally different, they tend to offset each other, requiring less funding. Put another way, the whole is less than the sum of its parts.
We hope the you have a better understanding of the meaning of Basket Deductible.