Glossary

What is Self-Insured Retention (SIR)?

The amount of loss the insured must pay before the insurance policy begins to respond, similar to but legally distinct from a deductible.

Full Definition

A Self-Insured Retention (SIR) is the amount of loss that the insured must pay out of pocket before the insurance policy begins to respond. While similar to a deductible, an SIR is legally distinct: with a deductible, the insurer handles the claim from the first dollar and bills the deductible back to the insured; with an SIR, the insured is responsible for managing and paying the claim until the SIR is satisfied, at which point the insurer takes over. SIRs are common in D&O, EPLI, and large commercial programs where the insured has the resources and sophistication to manage smaller claims.

Related Terms

Umbrella Policy

Aggregate Limit

Deductible vs. SIR

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Related Coverage & Services

Directors & Officers (D&O) Insurance

D&O insurance protects corporate directors and officers from personal liability arising from management decisions.

Employment Practices Liability (EPLI)

EPLI covers claims by employees alleging discrimination, harassment, wrongful termination, and other employment-related issues.

Umbrella Policy

An insurance policy that provides additional liability coverage beyond the limits of underlying policies such as auto, homeowners, or commercial general liability.

Aggregate Limit

The maximum total amount an insurance policy will pay for all covered claims during the policy period.

Deductible vs. SIR

While both require out-of-pocket payment by the insured, deductibles and SIRs differ in who controls the claim and when the insurer's obligation begins.

Business Insurance

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