Tools

Deductible and retention break-even calculator

Compares two deductible or retention options by expected annual cost, finds the claim frequency where they cost the same, and shows what a bad year would cost.

Runs entirely in your browser: nothing you enter is sent or stored by this site. Results are estimates for planning, not a quote or advice.

A higher deductible lowers the premium and moves the first dollars of every claim onto you. Whether that is a good trade depends on how often you have claims and how big they run. This tool compares two options on expected cost, finds the break-even claim count and shows a bad year. The numbers it opens with are examples.

How to use it

  1. Option A and Option B. For each, the annual premium, the deductible or retention per claim, and, if the program has one, an aggregate cap: the most you will pay in deductibles in a year. Take them from the quotes or the proposed program terms. Leave the cap blank if there is none.
  2. Expected claims per year. From your loss runs: count claims per year over the last three to five years. A broker can pull loss runs from your carriers.
  3. Average claim size. The average total cost of those claims.
  4. Claims in a bad year. A count you would hate to see. The default is 8.

The math

Expected retained losses = claims per year × the smaller of the average claim size and the deductible, then limited by the aggregate cap if there is one. Expected total = premium + expected retained losses. The break-even is the claim frequency at which the two options' totals are equal. The tool scans up to 200 claims a year and shows the crossing.

A hypothetical example with the opening numbers: Option A has a $42,000 premium and a $1,000 deductible. Option B has a $36,000 premium, a $10,000 deductible and a $40,000 aggregate cap. At 3 claims a year averaging $6,000:

  • A retains 3 × $1,000 = $3,000, for an expected total of $45,000.
  • B retains 3 × $6,000 = $18,000, for an expected total of $54,000.

Option A costs $9,000 less. The gap between them is $6,000 minus $5,000 for every claim, which reaches zero at 1.2 claims a year. That is the break-even. Below it Option B is cheaper. Above it Option A is, until about 34 claims a year, where B's cap makes it cheaper again.

In a bad year of 8 claims of $6,000, A costs $50,000. B would retain $48,000 but its cap holds that to $40,000, for $76,000. The second bad-year row assumes each claim is at least as large as the deductible. Here that changes nothing for A, and B stays at $76,000 because the cap binds.

Assumptions and limits

  • The tool uses one average size for every claim. A deductible limits each claim separately, so a mix of small and large claims with the same average retains less than the tool shows. Two claims of $500 and $11,500 average $6,000, but against a $10,000 deductible they retain $10,500, not $12,000.
  • Premium savings are what you were quoted. They are not guaranteed to persist at renewal.
  • It does not include collateral, claims handling or TPA fees that large-deductible programs often require. Add them with the Total cost of risk (TCOR) calculator.
  • A deductible and a self-insured retention are treated the same. They differ in who handles claims and how limits erode. See deductibles vs self-insured retentions: who pays first.
  • The tool cannot tell whether you can fund the bad year from cash. That judgment is yours and your CFO's.
  • Break-even is found by scanning, so it is an estimate. If no break-even appears up to 200 claims, one option costs less at every frequency for that claim size.

Read risk transfer vs retention: avoid, reduce, transfer or retain for the strategy, large deductible workers' comp programs: how they work and what they cost for the comp version, and loss runs: what they are and how to request them for where to get your claim counts. The glossary defines a deductible, a self-insured retention and a large deductible program.

Last reviewed October 10, 2026

Related guides

Deductibles vs self-insured retentions: who pays first A deductible is billed back after the insurer pays; a self-insured retention is paid by you first. How each affects claim control, limits and credit risk. Risk transfer vs retention: avoid, reduce, transfer or retain Every risk gets one of four responses: avoid, reduce, transfer or retain. How to choose using severity and capacity, with a worked deductible example. Large deductible workers' comp programs: how they work and what they cost How a large deductible comp program works: insurer pays first, you reimburse, collateral secures it, and what happens to claims, taxes and your mod. Total cost of risk (TCOR): what it includes and how to calculate it Total cost of risk adds premiums, retained losses, fees, safety spending and staff time into one yearly figure. The formula, a worked comparison and pitfalls. Loss runs: what they are and how to request them A loss run is the insurer's claim history for your policies. What it shows, how to request one, state deadlines, and how to fix errors before quoting.

Terms used here

Deductible The amount of a covered loss the policyholder bears before the insurer pays, set in the policy and subtracted from the loss. Self-insured retention (SIR) The amount of a loss the insured must pay itself, often including defense costs, before the insurer's liability policy begins to pay. Retention The share of a loss a business pays itself, through a deductible, self-insured retention or captive, before insurance responds. Large deductible program A policy where the insurer pays claims and then bills you for losses up to a high per-claim deductible, in return for lower premium and secured collateral. Loss run An insurer-issued report listing every claim on a policy over a period, with dates, amounts paid, reserves held and whether each claim is open or closed.

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