The insured chose not to purchase physical damage coverage on a snowmobile. Which method of handling risk does this describe?

Choosing not to purchase physical damage coverage on a snowmobile exemplifies the method of handling risk known as retention. Retention occurs when an individual or entity decides to take on the risk themselves instead of transferring it to an insurance company. By opting out of physical damage coverage, the insured is essentially accepting the potential financial consequences of any damage or loss that might occur to the snowmobile. This method is often employed by individuals who feel confident in their ability to manage the risk or who may not want to incur the additional cost of insurance premiums associated with coverage.

In this context, retention reflects a conscious decision made by the insured to bear the financial responsibility for any negative outcomes directly, rather than seeking to offload that risk through insurance.