Managing the Risk of Self-Insurance

As insurance premiums skyrocket, many people think about self-insuring.
Following are some thoughts that should be considered.

Insurance was created and is best used to protect against significant financial risks that have low frequency of occurrence, but a severe potential impact.
Natural disasters are a good example.

Small risk exposures should be self-insured on a regular basis.
Buying insurance for small risks is not economical or good financial planning.

People who self-insure large risk exposures generally do so on a passive basis.
This means they have a reason for self-insuring but have not thought through a plan to address all the consequences.

Here are the common reasons I have seen people choose to self-insure.

• A deep dislike and often a mistrust of insurance, insurance companies, and anything insurance related.
• The belief that nothing bad will happen to them.
• A financial inability or difficulty in paying the cost of insurance.
• The ability to pay premium but an overriding motivation to save money.
• The financial ability and personal risk tolerance to absorb the cost of a loss without significant discomfort.

In the absence of one or more of the above people do not take large financial risks.

Give thought to the reason to self-insure, the risk issues, and your comfort level.

Please talk to us about self-insurance. We can help you evaluate the pros and cons and create a thoughtful plan. Our most valuable service is helping you manage risk.

For 49 years, we have built our agency to be client focused. Your needs come first, and we believe in doing the right thing, always. Our professionals at Burke, Bogart and Brownell are always happy to assist you and answer any questions. Call us at 561-392-8888.

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