What does "self-insured" mean?

The term "self-insured" refers to the practice of not purchasing insurance and instead relying on personal savings or assets to cover potential financial losses. This approach means that an individual consciously decides to bear the risk themselves rather than transferring that risk to an insurance company.

This concept applies in situations where the individual believes their financial capacity is sufficient to absorb any losses they might incur. For instance, someone may choose to self-insure against minor health expenses or property damage, relying on their savings to cover these costs rather than paying premiums for an insurance policy.

In this context, the other choices do not accurately define "self-insured." Having multiple insurance policies would indicate a desire to transfer risk rather than accept it. Being insured only against natural disasters suggests a limited scope of coverage, which doesn't reflect the idea of self-insurance. Lastly, owning insurance with a high deductible still means engaging with an insurance policy, as there is still some transfer of risk happening.