Chapter 14, B. SIR vs. Deductible

• Jurisdiction: United States

B. SIR vs. Deductible

SIR and deductibles both serve the same purpose, which is to allot a portion of the risk to the insured, but the distinction can be significant when the insured files bankruptcy. For an insurer, the main considerations are whether the insurer could be required to drop down and pay amounts due within any applicable SIR, whether the insured must actually pay any SIR, and what the defense obligations are.

The deductible does not prevent the triggering of coverage by the policy. Following is an example of a "deductible" provision contained in a commercial general liability policy:

If an Annual Aggregate Deductible Amount (the "Aggregate") is shown in the Schedule, that amount is the most you must reimburse us for all damages ... that we pay under this policy and all other policies listed in

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