Intentional and non intentional retentions?..explain pls?

Question

Intentional and non intentional retentions?..explain pls?

Answer 1

As it relates to risk management an intentional retention is where a company decides to retain a part of the risk by purchasing insurance coverage with a deductible.

A non-intentional retention would be where a hazard is not recognized to exist therefore no insurance is purchased. If you suffer a loss because you didn't think an earthquake was possible in southern Illinois you have a non-intentional retention.

Another non-intentional retention would be purchasing insurance where the insurance company later becomes insolvent and is unable to meet its obligation.