Which of the following are examples of self-insurance?

• A. Property insurance
• B. Liability umbrella
• C. Medical plan for employees & Workers Comp
• D. Commercial auto policy

Answer: (C)

Self-insurance means a company funds its own losses from its resources instead of paying premiums to an insurer. This approach is common for employee health benefits and workers’ compensation in larger organizations. With a self-funded medical plan, the employer pays the actual medical claims as they arise and may use a third-party administrator to process claims, sometimes with stop-loss coverage to limit very large losses. For workers’ comp, some employers pay claims directly and only purchase reinsurance or provide a state fund protection to cap exposure, again rather than transferring all risk to an insurer. This control over funding and claims is what defines self-insurance.

The other options are typical insured arrangements where the company buys coverage from an insurer and pays premiums, transferring the risk to the carrier rather than funding losses itself.