Self Insurance Law and Legal Definition

Self insurance is a risk management approach in which an entity sets aside a sum as a protection against a probable loss, instead of transferring the risk by purchasing an insurance policy. In other words, self insurance establishes reserves for future losses instead of purchasing insurance. However, full or exclusive self-insurance is rare. A combination of self-insurance and commercial insurance usually provides the best cover for the self-insured. The overall process of self insurance is cheaper than buying a commercial insurance.