Businesses are always looking for ways to manage risk and keep their insurance costs down, while also protecting themselves from potential liabilities. One of the key tools for doing so is something called Self-Insured Retention (SIR).
So, what is Self-Insured Retention? Simply put, it means that a business agrees to cover a certain amount of their losses themselves before their insurance policy kicks in.
Understanding the ins and outs of SIR is crucial for any business owner looking to make smart decisions about risk management and ensure financial stability. Choosing the right strategy can affect how much you pay for insurance and how much you might have to pay out of pocket if something goes wrong.
This article will explain the self insured retention definition, compare it to deductibles, explore its benefits and drawbacks, and discuss some practical considerations to help you decide if it’s the right choice for your business.
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