Liability · Insurance Term
Self-Insured Retention (SIR)
Definition
A self-insured retention (SIR) is an amount of each claim that you must pay yourself — often including defense costs — before the insurance policy starts to respond. It is common in liability and umbrella policies.
In Plain English
An SIR looks like a deductible, but it works differently. With a deductible, the insurer usually handles the claim from the start and bills you back. With an SIR, you typically handle and pay the claim until you've spent the retention, and then the insurer steps in.
SIRs often include defense costs, so legal bills alone can use up the retention. Some policies require that the SIR be paid by you, not by another insurer.
SIRs appear on some liability policies for higher-risk properties and on many umbrella insurance policies for claims the underlying insurance doesn't cover. Some larger owners fund SIRs through a captive insurance company.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: an apartment owner's liability policy has a $25,000 SIR. A tenant's guest is hurt and sues. The owner pays the first $25,000 of defense and settlement costs, often through a claims administrator. Above that, the insurer takes over up to the policy limit.
What to Watch For
- Ask whether your policy has an SIR or a deductible, and who handles claims within it.
- Check whether defense costs count toward the retention.
- Keep cash reserves to cover at least one full SIR in a year.
- Confirm whether the SIR must be paid by you or can be met by other insurance.
Last updated October 14, 2026 · Primesure editorial team · How We Write