Also known as: SIR · Retention
An amount the insured pays directly on a claim before the insurance policy begins to respond.
A self-insured retention (SIR) is the portion of a loss the policyholder must pay out of pocket before the insurer's coverage applies. It resembles a deductible but works differently: with an SIR, the insured typically handles and pays claims up to the retention amount itself, and the insurer's duties (including, in many forms, the duty to defend) begin only above it. SIRs are common on larger or higher-risk programs and on certain liability and professional lines. Choosing a higher SIR lowers premium but increases what you pay on each claim, so it is a deliberate risk-financing decision.
A self-insured retention (SIR) is the amount you pay on a claim before your insurance responds. Unlike a deductible, you usually manage and pay claims yourself up to the SIR, and the insurer’s coverage, and often its duty to defend, begins above that amount.
With a deductible, the insurer typically pays the claim and then bills you back for the deductible, and the insurer usually defends from the first dollar. With an SIR, you generally handle and fund the claim up to the retention, and the insurer’s obligations begin only once the SIR is met.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.