A large haulage company decides to buy third party only motor cover for its fleet of vehicles and makes provision for any damage to its own vehicles to be repaired through its own vehicle maintenance workshops. This is an example of:

The scenario described is indeed an example of self-insurance. Self-insurance occurs when a company takes on the financial responsibility for potential losses instead of transferring that risk to an insurance company. In this case, the haulage company is opting for third party only motor cover, meaning it is only insured for damages it causes to others and not for damages to its own vehicles. By deciding to cover the repair costs of its own vehicles through its maintenance workshops, the company is effectively assuming the risk of damage to its own fleet. This approach reflects a conscious decision to manage and mitigate risk internally, which is the essence of self-insurance.

Understanding this concept is crucial for grasping how businesses can manage their risk exposure and the financial implications of doing so. This choice aligns with the principles of risk management, where companies evaluate the cost-benefit of insuring against certain risks versus handling them out of pocket.