FREE access to Professional Liability Insurance.

Click here for more information.
You are currently not signed in. Any products you have purchased will not be available until you Sign In.
For a personalized walk-through of IRMI Online, Request a Demo.

self-insured retention (SIR)

A dollar amount specified in a liability insurance policy that must be paid by the insured before the insurance policy will respond to a loss. Thus, under a policy written with a SIR provision, the insured (rather than the insurer) would pay defense and/or indemnity costs associated with a claim until the SIR limit was reached. After that point, the insurer would make any additional payments for defense and indemnity that were covered by the policy.

In contrast, under a policy written with a deductible provision, the insurer would pay the defense and indemnity costs associated with a claim on the insured's behalf and then seek reimbursement of the deductible payment from the insured. For example, assume that two policies are identical, except for the fact that Policy A is written with a $25,000 deductible, while Policy B contains a $25,000 SIR. Also assume that defense and indemnity payments for a given claim total $100,000. In the event of a claim under Policy A, the insurer would pay the $100,000 in defense and indemnity costs that were incurred. After the claim is concluded, the insurer will bill the insured for the $25,000 in payments made on the insured's behalf. In the event of a claim under Policy B, the insured will pay the first $25,000 of defense/indemnity costs, after which, the insurer will make the additional $75,000 in defense and indemnity payments on the insured's behalf.

See also Deductible.


Links for IRMI Online Subscribers Only: CLI XI.C; PLI VII.C; RF IV.B


More Risk Finance and Captives Information from IRMI
Books, Manuals, Newsletters IRMI
Online
ReferenceConnect
Risk Financing IRMI Online ReferenceConnect
Captive Insurance Company Reports IRMI Online ReferenceConnect
Captive Practices and Procedures IRMI Online ReferenceConnect
Captives and the Management of Risk IRMI Online ReferenceConnect
The Risk Report IRMI Online ReferenceConnect
Free Risk Financing Articles in IRMI.com
25 Risk-Conquering Ideas
Risk Finance
Captive Insurance
Additional Insured Insurance Law
Insurance Continuing Education Courses from IRMI
Ethics Considerations for P&C Insurance Professionals (CE)
Ethics in the P&C Insurance Workplace (CE)

Navigation

Social Media