phrase · also: SIR
self-insured retention
In plain English
An amount you pay yourself before insurance attaches — like a deductible, but you also handle the defense for losses below it.
Differs from a deductible: with a deductible, the carrier pays from dollar one and bills you back. With an SIR, you pay first, including legal defense, and the carrier doesn't get involved until you've exhausted the SIR.
What it covers
Nothing below the SIR threshold. Coverage attaches only after the SIR is exhausted, at which point the carrier handles defense and indemnity above that level.
What it does not cover
It is NOT a deductible. SIRs require the insured to handle the loss themselves up to the SIR amount, including any legal defense.
Where it trips people up
SIRs require sophistication. Smaller businesses without claims-handling capability often regret moving to SIR structures because they end up needing outside counsel for routine losses below the threshold.
The technical version
An amount the insured must pay (and typically defend) before insurance coverage attaches; functions similarly to a deductible but with the insured retaining responsibility for losses below the retention.