What Is Self Insurance?

Self Insurance

What Is Self Insurance?

Unfortunately, insurance costs are continually rising, and it may not be economically feasible to offer high-quality insurance with a low deductible. This is one of the circumstances where self insuring comes into play.

What Is Self Insurance?

Self insurance┬áis where a company or business does not pay an insurance company to cover their employees. Instead, they assume the risk for their employees. They pay the medical claims for their employees, particularly worker’s compensation claims. There are advantages and disadvantages to self insuring.


One of the main benefits of self insuring is that it allows employers to save money over the long term. It also leaves insurance control in the company’s hands and gives the company a better understanding of where their healthcare dollars go. This helps the company implement safety programs to help reduce their injury costs.


There are some obvious drawbacks to self insuring. The savings from it take a long time to realize, and the company has a higher level of risk than they would if they were fully insured. Although there is stop-loss protection, there is still quite a bit of financial responsibility that the company has.

Although self insuring may seem like the way to go, particularly if you have high worker’s compensation premiums, it can be risky for large businesses. It is a decision that the company must weigh the benefits and drawbacks very carefully before deciding to do it.