Many states require a self-insurer to

Many states require a self-insurer to

• A. File small claims with an insurer
• B. Provide a cash flow benefit
• C. Supervise defense attorneys
• D. Purchase excess insurance

Answer: (D)

Self-insurance means an organization funds its own losses up to a certain amount, rather than transferring all risk to an insurer. States often require an excess insurance layer to make sure there is coverage beyond what the entity is willing or able to retain. After the self-insured amount is used, the excess insurance kicks in to cover additional losses, providing protection against catastrophic claims and helping maintain financial stability and regulatory compliance. For example, if a company funds losses up to a million dollars and carries an excess policy of nine million dollars, a large claim would be paid first from the company’s funds up to the million, then the excess policy would cover up to nine more million. This is why purchasing excess insurance is the expected requirement.

Self-insurance means an organization funds its own losses up to a certain amount, rather than transferring all risk to an insurer. States often require an excess insurance layer to make sure there is coverage beyond what the entity is willing or able to retain. After the self-insured amount is used, the excess insurance kicks in to cover additional losses, providing protection against catastrophic claims and helping maintain financial stability and regulatory compliance. For example, if a company funds losses up to a million dollars and carries an excess policy of nine million dollars, a large claim would be paid first from the company’s funds up to the million, then the excess policy would cover up to nine more million. This is why purchasing excess insurance is the expected requirement.