Self-insurance means

• A. Saving to have money to cover possible future losses.
• B. Insurance that provides monetary benefits to a business that has experienced an unforeseen peril such as flood, fire, etc.
• C. A formal plan to transfer all risk to an external insurer.
• D. Investing in a third-party risk pool to share losses.

Answer: (A)

Self-insurance means retaining risk and funding potential losses with internal resources rather than buying external insurance. Saving to have money to cover possible future losses reflects this approach, where a business sets aside funds to pay for claims or losses as they occur. It’s different from transferring risk to an insurer, paying premiums for coverage, or pooling risk with a third party. Self-insurance relies on having adequate reserves and a plan to cover expected and unexpected losses from within the business.