Self insurance means that?

Self-insurance refers to a risk management strategy where an individual or organization decides to assume the risk of loss rather than transferring that risk to an insurance company. This means that instead of purchasing an insurance policy to cover potential losses, the policyholder chooses to cover any such losses out of their own funds. By doing so, they take the responsibility for any financial impacts that may arise from incidents such as accidents, losses, or damages.

This approach can be suitable for those who have the financial capacity to absorb certain risks or for businesses that can strategically manage their risk exposures. Engaging in self-insurance can lead to cost savings since the policyholder avoids paying traditional insurance premiums. In essence, the policyholder is effectively "banking" on their ability to cover potential losses if they occur, making the decision to self-insure a crucial element of their overall risk management strategy.

The other choices present alternative concepts related to insurance but do not accurately define self-insurance. For instance, one option involves directly purchasing an insurance policy from an insurer, which fundamentally differs from self-insuring because it involves transferring risk rather than retaining it. Another option describes a mutual fund setup for losses, emphasizing collective risk-sharing without individual risk absorption. Lastly, the reference to an insurer