Commercial Umbrella Insurance
What Is a Self-Insured Retention (SIR) on Umbrella Insurance?
A self-insured retention (SIR) is an amount you pay before umbrella coverage activates for claims not covered by any underlying policy — the umbrella equivalent of a deductible for drop-down coverage.
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What is a self-insured retention on a commercial umbrella policy?
When umbrella drops down to cover a claim that no underlying policy addresses, the SIR is your first-dollar obligation. Common SIRs range from $10,000 to $100,000. Unlike a deductible, an SIR is typically a true retention — you manage the claim and pay defense costs from within the SIR.
SIRs apply only to drop-down umbrella claims (where no underlying policy exists). For claims covered by an underlying policy, the underlying policy’s deductible applies and the umbrella has no separate retention.
Higher SIRs generally mean lower premiums. Large GCs sometimes accept $50,000–$250,000 SIRs to significantly reduce umbrella premiums. For most small to mid-size contractors, low or no SIR is preferred.
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