Large Deductibles/SIRs

With the cost of insurance rising continuously, many businesses are actively trying to reduce their costs through a number of methods. Two such methods used to reduce the cost of coverage are large deductible policies and self-insured retention (SIR).

Large Deductible Policies

Large deductible policies are simply insurance policies with larger-than-average deductibles. Because the deductible is so large, the cost of premiums for these policies is considerably lower. However, if a covered claim occurs, your business will be responsible for paying the full amount of the claim up to the deducible. For example, if you purchase a property insurance policy with a $3,000 deductible and your business incurs a $4,000 covered loss, you will pay $3,000 toward the total and the insurance company will pay only $1,000.

Self-Insured Retention

Self-Insured Retention, or SIR, is similar to purchasing large deductible policies in that it involves the use of higher-than-average deductibles. However, whereas the high deductible method allows the insurer to deal with all claims below and above the deductible level, the SIR method requires the business itself to handle any claims that occur below the self-insured retention.

For example, if you have an SIR of $7,000, any claims occurring below that level will be received and processed by your business. Only losses exceeding $7,000 will be reported to and processed by your insurer. This method further lowers the cost of coverage by alleviating some of the insurer’s duties. In addition, because losses below the SIR will not be reported to your insurer, they won’t be included in future premium calculations.

Using These Methods

If you are interested in purchasing large deductible policies, the SIR method or any other type of alternate insurance strategy, contact the Warren G. Bender Co. today to discuss your options. We offer a number of alternative risk programs, all of which have high ratings, and we can help you design an insurance strategy that meets your business’s unique needs.