Strategically managing your own insurance needs.


What is self-insured?

Self-insured is when a person or business sets aside resources, usually a pool of cash, to insure themselves against any accidents, illnesses or mishaps they may face. If these incidents occur, the individual or business would pay out of pocket to cover the associated costs. Self-insurance is also called self-funding.

How does being self-insured differ from traditional insurance?

Self-insurance requires reserving money to pay for costs entirely out of pocket. This differs from traditional insurance, where you pay a premium to an insurance company that handles and pays out claims.

For example, many tenants who rent residential apartments may not have renter’s insurance. Instead of having an insurance company to help protect their belongings, they opt to “self-insure” and pay for any losses themselves.

What does being self-insured entail?

Self-insurance is a choice some businesses make to have more control over their coverage. For a company to be self-insured, it usually sets aside a minimum monthly amount to approximate a traditional premium. Minimum requirements for self-insurance can differ from state to state.

Many smaller companies opt for self-insurance as a way to manage costs. However, if the business has employees, meeting the minimum coverage for employees is closely monitored and can be difficult if not fully understood. It’s best to consult a legal professional or accountant to ensure you comply with state requirements.

Challenges of a self-insurance approach

While self-insurance may seem like an attractive option for some businesses, it comes with challenges you should take note of:

  • You bear the entire financial burden of any losses or claims.
  • Self-insurance programs require careful adherence to complex legal and regulatory requirements, which can become time-consuming and costly to navigate.
  • Establishing and managing a separate reserve fund to cover potential claims can tie up significant financial resources.
  • You have to manage claims processing, investigations, and settlements, which require specialized expertise and resources that aren’t necessarily readily available to small businesses.

Let NEXT Insurance take care of you and your business

NEXT makes small business insurance easy. Get a quote, buy online, and download free proof of insurance 24/7 to help get you back to business.

To get your tailored instant quote, simply answer a few questions online. Once you’ve purchased your insurance, you can immediately access your certificate of insurance and share it 24/7 via the NEXT app.

Start a free instant quote with NEXT.

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Let’s find the coverage you need for your business
Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.
General Liability insurance
General Liability
Protect yourself from accidents that cause physical injury or damaged property.
Professional Liability or Error and Omissions Insurance
Professional Liability/E&O
Shield yourself from lawsuits that claim your work errors caused financial losses.
Workers' Compensation Insurance
Workers’ Compensation
Cover medical bills and lost wages if your employees have an accident at work.
Commercial Auto Insurance
Commercial Auto
Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.
Tools & Equipment Insurance
Tools & Equipment
Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.
Commercial Property Insurance
Commercial Property
Keep your building, inventory and equipment protected from fire or water damage.
Business Owner’s Policy Insurance
Business Owner’s Policy
Combine general liability and commercial property into one policy to protect your business.
* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.