Self-insurance is really no insurance. Landlords can easily do it without a mortgage but they are taking a huge risk. Set aside a big pile of cash or rely on a line of credit you won't be using.
The oversimplified insurance concept is to pay a small premium to cover a large loss. In self-insurance, to whom does Landlord pay the small premium? Who pays the large loss? It all comes back to Landlord who pays the full bill, so it's really not insurance at all.