Insurance passes the financial consequence of risk from the entity exposed (the insured) to a third party (an insurer) for an advanced fee.

Self-insurance is an alternative to insurance, where the hazard-taker themselves adopts the financial consequences of their own risks without paying in advance. Self-insured entities deal themselves with the consequences of hazard as they occur.

Self-insurance is not simply non-insurance; a self-insured risk adopted is:
• Taken by entities with the financial strength to bear any losses
• Managed, i.e. risk calculated; consequences sized; hazards controlled
• Regulatory compliant, i.e. with any statutory or other legal requirements
• Includes contingencies in place to meet the possible consequences