If a business self-insures its risks, what term describes the insurance claims that exceed their self-insured limit?

The term that describes insurance claims which exceed a business's self-insured limit is known as "specific excess." In a self-insurance setup, businesses typically retain a certain level of risk up to a defined limit. Once claims exceed this limit, specific excess insurance becomes relevant, as it is designed to cover those amounts above the self-insured retention. This type of coverage ensures that while a business may choose to handle smaller claims internally, they still have financial protection in place for larger, potentially damaging claims that exceed their capacity.

Understanding the context of self-insurance is also crucial here. Companies often prefer to self-insure for lower-tier risks to save on costs while purchasing specific excess coverage to mitigate the financial impact of unexpected, high-cost claims. This allows for better cash flow management and risk retention strategies.

Other options, while related to different aspects of insurance, do not specifically pertain to claims exceeding self-insured limits. General liability refers to a type of coverage that protects businesses from various claims related to injuries and damages. Umbrella coverage serves as an additional layer of liability protection, extending beyond primary policies. Retrospective rating is a premium calculation method based on a business's actual loss experience rather than a fixed premium. Each serves unique roles but