Self-insurance (Selbstversicherung / Selbstbehalt)
Self-insurance means covering a possible loss out of your own savings instead of paying an insurer to carry the risk. Selbstversicherung (self-insurance) is the full version — skipping a policy entirely for a given risk. Selbstbehalt (deductible, excess) is the partial version built into a policy: the insurer pays only above an agreed threshold, and the household self-insures everything below it.
Why it matters
Self-insurance is the decision rule that keeps an insurance budget proportional to actual risk. It pairs directly with expected value — comparing what a premium costs against the probable loss it covers — and with an emergency fund, which is what makes self-insuring viable in practice: a household with reserves can absorb a broken appliance or a cracked phone screen itself, while a household without any buffer has to insure against nearly everything, since even a small loss would force debt or a forced asset sale.
Getting this trade-off wrong in the other direction is over-insurance: paying premiums, year after year, for risks small and infrequent enough that a household's own reserves could have absorbed them at a lower average cost.
Worked examples
1. Deciding whether to self-insure a small risk. A household considers an extended warranty for a €600 phone, priced at an illustrative €96 per year. Screen damage happens on average once every four years, with a typical repair cost of €150. The expected annual cost of paying out of pocket is €150 / 4 = €37.50 — well below the €96 premium. Self-insuring this risk (setting the €96 aside instead, or simply keeping it in the emergency fund) comes out ahead on average, because a cracked screen is a loss the household can absorb without disruption, not one that risks its finances.
2. Choosing a Selbstbehalt (deductible) on a policy. For risks worth insuring at all — like Kaskoversicherung (comprehensive car insurance covering damage to the policyholder's own vehicle) — raising the deductible self-insures the smaller, more frequent claims and keeps the policy focused on larger ones.
| Selbstbehalt (deductible) | Illustrative annual premium | Self-insured per claim |
|---|---|---|
| €0 | €800 | €0 |
| €500 | €620 | first €500 |
| €1,500 | €480 | first €1,500 |
Moving from €0 to €500 saves €180 a year in premium — €1,800 over ten years — in exchange for carrying the first €500 of any claim out of reserves. That trade only makes sense if the household actually holds €500 in accessible savings; a deductible it cannot cover if a claim happens is not self-insurance, it is an uncovered gap.
Check yourself
A phone repair costs €150 on average and happens once every 5 years. What is the expected annual cost of self-insuring this risk (in euros)?
What makes self-insuring a given risk practical for a household, rather than reckless?
How does a Selbstbehalt (deductible) on an insurance policy relate to self-insurance?
Which of these risks are better candidates to self-insure than to buy a dedicated policy for, all else equal? (Select all that apply.)