What method of handling risk is used when someone pays for their own car damage without insurance?

The method used when someone pays for their own car damage without insurance is retention. This approach refers to a situation where an individual assumes the financial responsibility for a risk they face, rather than transferring that risk to an insurance provider. By choosing to pay out of pocket, the individual is essentially "retaining" the risk, meaning they are absorbing the potential costs associated with the vehicle damage themselves rather than shifting that responsibility elsewhere.

Retention can occur when an individual decides that the cost of insurance is not worth the potential benefits, or they feel that they can manage the risk more effectively on their own. This method is common among people who have adequate savings or who feel confident in their ability to cover such expenses if they arise.

In contrast, the other methods listed involve different approaches to risk management: transferring risk involves purchasing insurance to shift the financial burden to an insurance company, avoidance entails taking measures to completely eliminate the risk, and the insurance method designates the purchase of an insurance policy for protection against certain types of risks.