Which of the following risks would be the best candidate for self insurance?

Question

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Self-insurance is a risk management strategy in which a company decides to bear the financial responsibility of certain types of risks rather than paying premiums to an insurance carrier. In this scenario, a large parcel delivery company sustaining occasional damage to its vehicles is a good candidate for self-insurance as the frequency of occurrence is relatively low and the financial impact can be managed by the company. On the other hand, malpractice suits, fire insurance for a business with multiple locations, and life insurance for partners in a law firm involve higher potential risk and financial exposure, making self-insurance less feasible.

Which of the Following Risks Would Be the Best Candidate