YOU ASK:

What is the definition of Self-Insurance?

WE ANSWER:

Self-Insurance refers to the act of assuming the financial risks involved by setting aside the entity's own money. This fund takes the place of an insurance policy so that the money that was supposed to be used to pay premiums is the one used to fund expenses associated with risks (such as medical expenses for injury due to an accident).

Self-insurance usually happens to medium to large-sized companies who pay for small yet frequent losses. For instance, a construction company can pay for minor injuries to their construction employees. (This is, of course, done in accordance to legal requirements for workers' compensation.) A taxi company can also pay for minor damages to their taxi fleet.

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