Who self insures and how do you do it ?

  • by Never
  • May 30,2016
  • 5 answers

I have liability only car insurance. No homeowners because my house is owned outright and my health insurance doesn't cover a dime unless I spend $6500.
What I have never done, however, is set up a specific reserve account.
Curious how others do it. I know Ive saved a lot on homeowners and car insurance but now that I went from $1500 car to a $9000 one, Im thinking I need a specific account to pay all the excess insurance into.
Please. No preaching. I like taking good risks. I just want to account for it properly.


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Insurance Answers (5)

Casey Y 6 months ago

You may have to put up a bond or ILOC to be cleared with the state as self insured. You need to apply for the right to self-insure.

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Insurance Pickle.com 6 months ago

You put the amount that the house is worth in a bank. Or, you transfer that risk to someone else. And, there is a big difference between someone who takes risks and someone is making a huge mistake.

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Judy 6 months ago

You ARE by definition self-insured - if anything happens, you're responsible for the bills.

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jmm2112 6 months ago

Whether you can "self insure" auto coverage depends on state law. They don't care about collision/comprehensive - that's your risk. They DO care about liability coverage. Most states that permit it at all require that you post a bond of some kind. Better check the laws for your state.
As far as homeowners' and health insurance goes, there is no "self insure" process. You either have insurance or you don't. The only exception to that would be a Health Savings Account (HSA) for people with high-deductible health plans. It's not "insurance" but it provides some tax advantage.

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mbrcatz 6 months ago

I think you're asking the wrong question.
Regarding "self insurance", in order to qualify to "self insure" in any state except New Hampshire (which does not require liability insurance), you must apply to the state insurance department and submit your financial information - letters of credit from the bank, audited financials, etc. Larger companies - we're talking about companies with large fleets of vehicles more than 1000 units, and probably a minimum of $25,000,000 in annual revenues - would apply to be "qualified self insured". So I don't think this is what you really want.
Many states will allow you to be bonded, instead of buying insurance. To be bonded, you'd need to go to an agent, and buy a bond from the insurance company. You would have to renew this bond every year. To buy the bond, you would have to show personal assets and income tax returns, to prove that you have the money to pay the claim, if you cause a big accident. It's quite possible a letter of credit from a bank would be needed. Then, you also "personally guarantee" the bond, pay the insurance company, and they issue it.
Generally, it's not easy to do this, and it doesn't save you very much money over buying minimum limit insurance. Additionally, if you have ANY tickets or ANY accidents, or if you are under 25 or over 70, or anyone driving your car fits this profile, you are most likely not going to be offered a bond.

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