In the context of insurance, what does 'self-insuring' mean?

• A. Transferring risk to another insurer
• B. Withholding coverage from certain risks
• C. Covering a portion of risk without external insurance
• D. Buying additional policies for the same risk

Answer: (C)

Self-insuring refers to the practice where an individual or organization takes on the financial responsibility for certain risks rather than transferring that risk to an insurance provider. This means that instead of purchasing insurance to cover these risks, the entity retains enough resources to cover potential losses.

By choosing to self-insure, the individual or organization believes they can manage or absorb their losses, which can lead to cost savings when compared to paying premiums for coverage. This method is commonly used for risks that are predictable and manageable.

The other options do not align with the concept of self-insuring: transferring risk involves relying on an insurance company to mitigate that risk, withholding coverage means intentionally leaving some risks uninsured, while buying additional policies suggests taking out more insurance rather than absorbing risk.