What is a self-insured retention (SIR)?

Self-Insured Retention (SIR) is a type of insurance policy used in the state of Washington. It is a form of risk management that allows a company to maintain some financial responsibility for losses that occur. Essentially, the insurer agrees to cover losses up to an agreed-upon amount, and the company retains the financial responsibility for any losses beyond that amount. The advantage to SIR is that it allows the company to tailor their risk management strategy to their own needs, instead of relying solely on an outside insurer to cover their risk. This can be particularly beneficial for companies that have a high risk profile, because it allows them to manage their risk more effectively. Additionally, it provides financial flexibility by allowing the company to choose the amount of coverage they need, and pay for only the coverage they actually require. The disadvantage to SIR is that it requires the company to have sufficient financial resources to be able to cover any losses that occur beyond the agreed-upon amount. Additionally, if the company is not able to accurately assess the risk they are exposed to and the amount of coverage they need, they may end up paying more than necessary for their insurance coverage. This can lead to increased costs, which may not be offset by any savings from reducing the amount of coverage. Overall, SIR can be a beneficial tool for companies in Washington that are looking for a customized, cost-effective risk management strategy. However, it is important for companies to properly assess their risk exposure and desired coverage needs in order to avoid any unnecessary costs.

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What is a self-insured retention (SIR)?

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