Investopedia explains 'Self-insure'
Self-insuring against certain losses may be more economical than buying insurance from a third party. The more predictable and smaller the loss is, the more likely the risk is to be retained by a self-insured person. The idea is that since the insurance company aims to make a profit by charging premiums in excess of expected losses, a self insured person should be able to save money by simply setting aside the money that would have been paid as insurance premiums.
Then, if losses occur, the self-insured person can draw against these funds, and retain any excess. Generally, the more financial resources a person has, the more risks they are able to self-insure against. This is because wealthy individuals can absorb a higher level of losses before significantly impacting their lifestyle.
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