1. The insurance authorized by this chapter may be provided by:
a. Self-insurance, which may be funded by appropriations to establish or maintain reserves for self-insurance purposes.
b. An insurance company authorized to do business in this state which the commissioner has determined to be responsible and financially sound, considering the extent of the coverage required.
c. Any combination of the methods of obtaining insurance authorized in subdivisions a and b.
2. This chapter does not prohibit a political subdivision from uniting with other political subdivisions in order to purchase liability insurance or to self-insure.