What is a self-insured retention (SIR)?
A Self-Insured Retention (SIR) is a concept in insurance law used in California, which allows an insured party to pay the first part of a claim before the insurance company is required to pay the remainder. It is like a deductible, except the insured party is responsible to pay the total amount of the claim up to the SIR limit before the insurance company is required to make a payment. For example, if an insured has an SIR of $50,000 and a claim arises for $100,000, the insured would have to pay the first $50,000 before the insurance company is obligated to pay the remaining $50,000. SIRs are usually found in Commercial General Liability and Errors & Omissions policies. They are often high, and a party with an SIR must be financially solvent to pay the SIR amount if a claim arises.
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