The point of insurance is to have money to pay for something when an unpredictable disaster occurs, like an auto accident, a health problem or storm damage to your home. This money is promised based on premiums that people pay to an insurance company who will then pay for any problems caused by an unpredictable disaster. These premiums can become very expensive, and there is a chance you will never see that money again. However, self-insuring is a way to save money on your own insurance.
Most states require you to have some form of car insurance to prove that you will take care of any damage to someone's car if an accident occurs. This means that even if you are self-insuring, you will need to have the minimum amount of car insurance provided for your automobile to prove to the state that you will pay for damage that may occur to someone else's car or property if you cause the damage. However, to insure a nicer car or insure your own property, self-insuring works quite well. Take the money that you would pay for those raised premiums and create an account that makes a certain percentage of money. This may take some time managing and finding the correct account, but it will allow you to have access to this money whenever you need it, if you need it.
As many people in this country do not have health insurance because they cannot afford full coverage or proper coverage, self-insurance creates a way for people to have health insurance. If you do not have existing or long standing health problems, simply get emergency health insurance through an insurance company to cover anything that occurs which is entirely unpredictable. Then for other things like doctor's visits or prescriptions, self-insure by taking the money that you spend on a full health insurance premium and invest it into a money market, or the stock market, so that you will have money on-hand to pay for these things, but also access to the money, in case you need it for another part of your life.
While insurance on a home is meant to protect from unpredictable things like natural disasters and robberies, full coverage is expensive and relatively unnecessary. A cheaper monthly premium can be purchased from insurance companies for renter's insurance, which will cover all of the items in your home, but not the home itself. For the actual home repairs, save and invest extra money every month and put it into a money market or liquid asset fund so that it will continue to make money and be on hand in case you need it. This may be a risk if you live in an area with a large number of natural disasters, but in places that are relatively peaceful weather and fire-wise, it is a great way to save money on your premiums.
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