Glossary

Self-Insured Retention (SIR) on an Umbrella Policy

By LiabilityGap EditorialUpdated October 14, 20263 min read

The short answer

What is a self-insured retention (SIR) on an umbrella insurance policy?

A self-insured retention (SIR) is the amount of a loss you pay yourself before an umbrella policy responds to a claim none of your underlying home or auto policies covers. Claims they cover need no SIR. Canadian amounts vary: ICPEI's umbrella has no deductible, but a $1 million retained limit on worldwide auto coverage.

Key takeaways

A self-insured retention applies only when the umbrella responds directly to a claim no underlying policy covers — a drop-down claim, such as a defamation suit your home policy excludes. For claims your home or auto policy covers, the underlying limit sits beneath the umbrella and no SIR applies.
A deductible is subtracted from a claim your insurer is already handling; an SIR is a layer you carry yourself before the umbrella engages at all on a drop-down claim.
Some Canadian insurers advertise personal umbrellas with no deductible at all: Aviva says Ovation umbrella holders don't pay one on a claim, and ICPEI says its umbrella has no deductible beyond those on the underlying policies.
Where a Canadian personal umbrella does carry a retention, it can be large and targeted: ICPEI's worldwide auto coverage is subject to a $1 million retained or self-insured limit.
The retention is set by the policy wording and shown on the declarations page, and it varies by insurer — confirm the amount, and which claims it applies to, before you buy.
A pure follow-form excess policy has no need for an SIR, because it only ever pays on top of underlying coverage; a retention clause is a clue you hold a true umbrella that can drop down.

A self-insured retention (SIR) is the amount of a loss you pay out of your own pocket before an umbrella policy pays a claim it is responding to directly. It only comes into play for claims none of your underlying policies cover: the situations where a true umbrella policy is broader than the home and auto policies beneath it, such as a defamation claim your home policy excludes. For those claims there is no underlying insurer to pay first, so the SIR stands in as the "underlying" layer, and the umbrella pays everything above it up to its limit.

What is a self-insured retention (SIR) on an umbrella insurance policy?#

It's the retention you carry yourself on a "drop-down" claim — one the umbrella covers but your underlying policies don't. On every other claim, the underlying policy's limit, commonly $1 million, sits beneath the umbrella instead, and no SIR applies. The amount is set by the policy wording and shown on the declarations page, and it varies by insurer.

An SIR is not a deductible, though they rhyme:

	Self-insured retention	Deductible	Underlying limit
What it is	The first part of a drop-down claim, which you carry yourself	An amount subtracted from a claim your insurer is already paying	The limit of your home or auto policy, which pays first
When it applies	Only when no underlying policy covers the claim	On claims under the policy that carries it	On every claim the underlying policy covers
Who pays that layer	You	You	Your home or auto insurer
Where to find the amount	Your umbrella's declarations page	Each policy's declarations page	Your home and auto declarations pages

When a claim is covered by your auto or home policy, the SIR is irrelevant: the underlying policy's limit is what sits beneath the umbrella, and the umbrella simply pays the excess.

How big is the SIR on a Canadian personal umbrella?#

It depends on the insurer, and two published Canadian examples show how wide the range is. Some insurers advertise their personal umbrellas with no deductible at all: Aviva says that with its Ovation umbrella, you don't pay a deductible in the event of a claim, and The Insurance Company of Prince Edward Island (ICPEI) says its umbrella has no deductible beyond those on your underlying policies. Where a retention does appear, it can be large and aimed at one exposure: ICPEI's umbrella includes worldwide auto coverage "subject to a $1 million retained or self-insured limit."

Insurer (product)	What it publishes about deductibles or retentions
Aviva Canada (Ovation Umbrella Liability)	No deductible to pay in the event of a claim
ICPEI (Personal Liability Umbrella; NB, NS, PEI and Quebec)	No deductible beyond those on underlying policies; worldwide auto coverage subject to a $1 million retained or self-insured limit

Sources: each insurer's own product page, checked October 2026. Final terms are set by the policy wording.

The practical step: ask your broker for the declarations page and the retention clause before you buy, and confirm which claims it applies to. Commercial umbrella and excess policies use the same mechanism, and their retentions can be much larger.

Why it matters to you#

The SIR is the honest price of the umbrella's extra breadth. A pure excess liability policy has no need for one, because it only ever pays on top of underlying coverage; the presence of an SIR in the wording is a decent clue you're holding a true umbrella that can drop down and cover claims your base policies won't. Canadian personal umbrellas vary — some advertise no deductible at all, others carry targeted retentions like ICPEI's $1 million on worldwide auto coverage — so it's rarely a reason to skip the coverage, but it is worth confirming the number before you buy.

In practice#

You're sued for defamation over an online review. Your home policy excludes it; your umbrella covers it. You pay any retention shown on your declarations page, and the umbrella pays above it.
You're sued over a car crash in Canada. Your auto policy responds first, so no SIR applies — the umbrella just pays above the auto limit.
You're planning to drive abroad. If your umbrella's worldwide auto coverage carries its own retention — ICPEI's is $1 million — know that number before you go.

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Frequently asked questions

What is a self-insured retention (SIR) on an umbrella insurance policy?

It's the amount of a loss you pay yourself before an umbrella policy pays a claim that no underlying policy covers. It only matters when the umbrella drops down to cover something your home or auto policy excludes; claims those policies cover need no SIR, because their limits sit beneath the umbrella.

What is the difference between a self-insured retention and a deductible?

A deductible is subtracted from a claim your insurer is already handling. A self-insured retention only applies when the umbrella policy responds on its own, with no underlying policy involved — for claims your home or auto policy covers, the underlying limit itself fills the gap and no SIR is charged.

How big is the SIR on a Canadian personal umbrella policy?

It depends on the insurer and is shown on your declarations page. Some Canadian personal umbrellas are advertised with no deductible at all, while ICPEI's umbrella applies a $1 million retained or self-insured limit to its worldwide auto coverage. Ask your broker for the retention clause before you buy.

Does every umbrella policy have a self-insured retention?

No. A follow-form excess policy only pays above underlying coverage, so it has nothing to retain. A retention clause appears when an umbrella can drop down and cover claims your home or auto policy excludes — and some Canadian insurers advertise their umbrellas with no deductible on claims at all.

Sources

Personal Liability Umbrella — The Insurance Company of Prince Edward Island
Ovation Umbrella Liability — Aviva Canada

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