Major differences between self-insured retentions (SIRs) and deductibles concern what aspect?

The distinction between self-insured retentions (SIRs) and deductibles primarily revolves around the responsibilities of the insurer in the event of a loss.

When a policy includes a self-insured retention, it means that the insured is responsible for covering a specified amount of loss before the insurance company pays for any remaining claims. The insurer does not engage with the claim until the SIR amount has been satisfied by the insured. This can affect how claims are handled and the initial communication during the claims process, but fundamentally, it shifts more responsibility onto the insured for a portion of the loss.

In contrast, with deductibles, the insurer typically takes on the claims process right from the start, paying for the total claim amount with a reduction applied to the payout equal to the deductible amount. This is a key aspect in understanding how recovery and responsibility are structured between the insured and the insurer, highlighting the fundamental differences in how these two mechanisms operate in the context of insurance coverage and claims processing.

Thus, the correct answer reflects how SIRs fundamentally alter the insurer’s responsibilities in a loss situation, creating a significant difference in the treatment of claims compared to deductibles.