Managing Your Risk: Self-Insured Retentions vs. High Deductibles

In the current economic climate, first-dollar coverage has become a luxury that many commercial insureds can no longer afford. (Shutterstock)

Although policies with large self-insured retentions (SIRs) and deductibles have always been available, they were frequently overlooked in the past when bottom lines were healthier and insurance-premium costs were subject to less scrutiny. As more insureds assume greater responsibility for managing the risk of smaller claims while relying on traditional insurance products for catastrophic protection, more policies are being issued with significant SIRs and deductibles.

While insurance limits attach above the primary layer of risk imposed on the insured in both self-insured retentions and deductibles, these types of coverages are otherwise very different. That’s why it’s important that clients understand the differences between SIRs and deductibles and the various issues that can arise both for the insured and the insurer.