What is a 'self-insured retention' (SIR) in an umbrella or excess policy?

The Self-Insured Retention (SIR) in an umbrella policy applies to claims that are covered by the umbrella but not by underlying primary policies (a 'gap' the umbrella alone covers). The SIR is the amount the insured must pay out of pocket before the umbrella responds for these claims — typically $250 to $25,000 for personal umbrellas, more for commercial. The SIR is distinct from the underlying limit (the amount of primary insurance that must exist before the umbrella attaches for claims covered by both). For claims covered by underlying policies, the umbrella pays only after the underlying limit is exhausted; no SIR applies. For claims covered only by the umbrella (broader coverage), the SIR applies as a deductible. The SIR ensures the insured has some 'skin in the game' even for gap-filling claims and keeps umbrella premiums affordable.