What are the risks of self-insuring?

Self-insuring, or taking on the financial responsibility of covering damages or injuries instead of purchasing an insurance policy, carries a high risk for individuals. Unfortunately, there is no guarantee that the cost of a covered incident will not exceed the amount of money set aside. Therefore, if there is an incident or event that causes more damage or injury than you have resources to cover, the cost of that event could put you in financial ruin. Additionally, when an individual self-insures they are responsible for navigating the legal issues associated with an incident, which can be costly as well as incredibly time consuming. Furthermore, self-insuring does not provide the same legal and financial protection that an insurance policy does. This is especially true in the event of a lawsuit. Finally, self-insuring is often also more expensive as individuals must save or invest money in order to cover the cost of an event themselves. This means that instead of using money for other investments or purchases, individuals must devote resources to self-insuring instead. In conclusion, self-insuring carries significant risks that must be carefully considered prior to taking on the financial responsibility of an event or injury. Individuals must weigh the potential losses against the potential gains of taking on the responsibility themselves. Moreover, it is important to remember that self-insuring does not provide the same protections and legal support as an insurance policy. Therefore, individuals must carefully examine the pros and cons of self-insuring before making any decisions.

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