> For the complete documentation index, see [llms.txt](https://docs.ribbon.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ribbon.finance/ribbon-lend/introduction-to-ribbon-lend/built-in-insurance.md).

# Built-in insurance

Each pool has its own insurance fund; it is established by setting aside a percentage of 5% of accrued interest charged to the borrower. 

Following a default and the auction mechanism described above, two alternative scenarios may arise:

1. As mentioned, if the lenders reject the best offer received in the auction, they can ask for the partition of the insurance fund;
2. On the contrary, if they accept the bid, the insurance fund is automatically acquired by the person/organization who won the auction.

The insurance sum is converted to protocol revenues when a pool is closed.