A Word From Our Sponsor On How To Use Self-Insurance

Self insurance is an option to those who feel like they may not have enough money saved up to protect their businesses. For good or for bad, modern society has many people ready to sue, and it is important for every conscientious business man to examine this issue. One particular area to watch is workman’s compensation. This is the area for the businessman to get involved and completely understand the numbers involved in his insurance and the risks involved.

Insurance is a numbers game. You can use statistics to find the number of times a business owner like yourself is likely to be sued, and for how much on the average. This information can be interpolated from the actuarial tables of your insurance company. If your type of business is sued once every ten years, and the average size of the suit is $10,000, then your premium will be $1000 per year with an amount added for the profit of the insurance company. For this example, a company may consider designing a self insurance plan where they set aside $10,000, saving themselves the cost of working through the insurance company and earning interest on the amount. This is a viable option, although it doesn’t deal with black-swan events where there is a catastrophic event that defies the statistics. This is where an insurance company can work with a partial plan combining self-insurance and commercial insurance, to control the total risk package.

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