You are self-insured whenever you do not have an insurance policy that covers a risk.
For instance, if you’re renting and don’t have renters insurance, but you go to the store and buy a stereo without realizing it, you’re self-insuring the stereo.
Accepting full responsibility for the safeguarding of one’s assets and, consequently, the financial risks associated with potential losses, such as being robbed, is self-insurance.
Any circumstance in which you stand to lose something and do not have insurance for it is covered by self-insurance.
People who do not have life insurance, for instance, are self-insuring. If they do not have insurance that covers them, they are self-insured, regardless of whether they have the financial means to compensate their family for the income they would have lost in the event of their death.
Self-insurance is not a good idea when you don’t have enough money to cover the financial consequences of a loss.
