To Self Insure: It is an Option

self-insured-signsLet me address the elephant in the room before I continue any further, NO ONE, including myself enjoys paying for insurance. It’s a check to a big company for a product we hope we never need. I personally carry a lot of insurance because I would rather pass that risk onto another party than pay out of my pocket if there is a claim. Some people don’t feel this way.

I have some companies that chose to self insure. I don’t recommend this for everyone, but it may be that you might not need insurance. If your business is really small and you do not have clients that come to your physical location and you are not selling anything but a service you are providing, maybe you could hold off. I would suggest a professional liability policy for most people that fit this area, but you are not legally required to carry insurance, except workers compensation and auto insurance.

If your company is able to financially survive a lawsuit demanding damages, then maybe you could self-insure. Insurance after all is about risk reduction. Some people have different levels of risk aversion. Another way to address this issue is by raising the deductible which will lower your premium. Some companies divide the company into different entities and limit the assets in the company with the contracts to limit the possible exposure.

As an overall statement, I do not recommend companies nor individuals go without insurance, especially in this very litigious society, but this is America and you are free to make your own choices.

For me, I’m going to continue to grumble when I write out the check and hope I never need use the insurance.

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