What is a Self-Insured Retention (SIR) in a Liability Policy?

Self insured company pays the claim out of its own money up to a certain amount. — How does a self insured retention (SIR) affect a Florida injury case?

A self-insured retention (SIR) is a dollar amount stated in a liability insurance policy that needs to be paid by the insured prior to the insurance policy paying a loss.

Example

John slips and falls on a substance on the floor of a Publix. He breaks his wrist. He makes a claim against Publix by writing a letter to them which requests their insurance information. Publix will likely respond with a letter from a third party administrator (TPA) stating that Publix has SIR of $1,000,000 or so.

This means that Publix will pay the first million dollars of damages and attorney’s fees from their own pocket for John’s injury. Publix’s insurer would then pay any amounts above $1 Million.

1. Who has an SIR?

Large businesses typically have an SIR. Examples of businesses who are likely to have an SIR are Walmart, Publix Supermarkets, Whole Foods, Universal Orlando Resort (Universal Studios), Sea World, Petsmart, Target, Costco, Winn-Dixie, Sedano’s Supermarkets, Kohl’s, Disney and many large businesses.

Corporate restaurants are likely to have a SIR but a restaurant franchisee is not likely to have an SIR. Counties, municipalities, cities and the state are likely to have an SIR.

2. Does an SIR affect the time it takes to settle a claim?

How long will it take to get a settlement for my Walmart accident case? — How long does it take to settle a case against a company with a self funded retention (SIR) in Florida?

Maybe. If an injured person has a claim against a company with a SIR, the claim may take longer to settle because the company does not have a duty to act in good faith. The TPA may need authority from the company to settle the case.

Sometimes the in-house adjuster at a company with an SIR meets on a weekly or monthly basis to discuss claims. This may delay settlement. An SIR may delay settlement of a case because you are dealing with an additional party (a TPA) in the case.

3. Are their advantages if you are injured by a company with an SIR?

Maybe. Uninsured motorist (UM) coverage provides compensation to an insured for bodily injury or wrongful death damages caused by the negligence of an uninsured motorist. A vehicle that is covered with a policy that has an SIR may be considered uninsured in Florida.

An injured person can make a claim against an UM insurer at the same time he or she makes a claim against the entity with a SIR. This is one of the few instances when you may be able to collect the same damages twice. It may be the best practice to get a written assignment of subrogation from the UM carrier.

I don’t know whether you can do the same if you were injured in another state.

Example

John is driving a truck. A truck crashes into the back of the truck that John is driving. John claims neck and back injuries and a shoulder injury.

The negligent truck driver was under dispatch at the time of the accident and the dispatcher has a $2,000,000 liability policy with Travelers Insurance. That policy has a $250,000 SIR. John has $10,000 in uninsured motorist coverage with Progressive Insurance.

Before John is finished receiving medical treatment, he demands that Progressive pay him the $10,000 in UM coverage.

Progressive argues that John is not entitled to the UM coverage until his claim exceeds the $2,000,000 available in liability insurance. John files a civil remedy notice, sends it to Progressive and they ultimately pay the $10,000 in UM benefits.

This $10,000 check from Progressive is in addition to John’s claim against the dispatcher. John later settles his personal injury claim for $200,000 with Travelers. This is the basic fact pattern from a $210,000 settlement of mine.

4. Can you file a claim with the Department of Insurance?

Maybe. Sometimes an insurer will not act in good faith, and you may want to submit a request for assistance (complaint) with the Department of Insurance.

In many situations you cannot submit a consumer complaint with the department of insurance against a company with a SIR or its TPA because the insurer has done nothing wrong if the claim value hasn’t exceeded the insured’s SIR.

However, if the insurer fails to send you a disclosure statement of certain information in a liability claim or once the settlement value of a liability claim exceeds the SIR then you can file a consumer complaint in good faith.