goofy-goober
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LSDefine
Simple English definitions for legal terms
self-insured retention
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A quick definition of self-insured retention:
Self-insured retention is a term used in insurance. It means the amount of money that a person or company has to pay themselves before their insurance policy will start paying for a loss. For example, if someone has a self-insured retention of $1,000 and they have a loss of $5,000, they will have to pay the first $1,000 themselves before their insurance policy will pay the remaining $4,000. Self-insured retention is also known as SIR and is different from a deductible.
A more thorough explanation:
Definition: Self-insured retention is the amount of money that an insured person or company must pay out of their own pocket before their insurance policy will start covering the rest of the costs. This is different from a deductible, which is a set amount that the insured person or company must pay before the insurance policy starts covering costs.
Example: Let's say a company has a self-insured retention of $10,000 for their property insurance policy. If they have a covered loss that costs $50,000, they will have to pay the first $10,000 out of their own pocket before their insurance policy will start covering the remaining $40,000.
Another example: A person has a self-insured retention of $500 for their car insurance policy. If they get into an accident and the repairs cost $2,000, they will have to pay the first $500 out of their own pocket before their insurance policy will start covering the remaining $1,500.
These examples illustrate how self-insured retention works. It is important to understand the difference between self-insured retention and a deductible, as they can affect how much an insured person or company will have to pay out of their own pocket before their insurance policy starts covering costs.