A client has just made the decision to increase their homeowners deductible from $500 to $1000. What method of handling risk did the client use?

The client’s decision to increase their homeowners deductible from $500 to $1000 represents a method of risk retention. This approach involves the individual assuming a greater portion of the financial risk associated with potential losses by choosing a higher deductible. By opting for a higher deductible, the client is essentially agreeing to pay more out of pocket in the event of a claim, which can lower their premium costs. This is a common strategy for managing risk, as it allows clients to retain more of the risk while potentially saving money on insurance premiums.

In this case, the client is not reducing the risk, as they are still exposed to potential losses, nor are they implementing measures to control losses or avoid the risk altogether. Instead, they have chosen to accept a higher level of risk, which reflects the principle of retention in risk management.