My auto insurance premiums have been going up quite a bit over the past few years. It’s not b/c I’m filing claims, that’s the going rate. I got to thinking that maybe I should self-insure my vehicles rather than paying for the ever increasing premiums. Apparently I can deposit a certain cash amount w/the DMV, then I meet the state’s insurance requirements. I don’t need no auto insurance in other words.
Anybody here have any experience w/ this?
Have you inquired about the amount needed on deposit? In Mississippi long ago a $10,000 bond was enough to cover the car owner. But those were different dollars than the ones we have today.
It’s $35K apparently in Calif
My dad did it for two years in the 1950’s, and my uncle did it for many years with his taxi fleet (350 cabs).
Yeah I thought Minnesota was over a million but looks like it’s 5 million and a minimum of 25 cars in the fleet. I can’t believe $35,000. You can’t hardly fix a broken leg for that-depending on how many screws are used.
I do certainly take the gamble of liability insurance, vs self insured.
I would continue the liability insurance and write the policy for the amount of your assets. Let’s say your assets are $500,000, but you have only deposited $35,000 with the state. You are involved in an accident and you are determined to be at fault. The medical bills and property damage to the other party amount to $450,000. Since your assets are $500,000, you are out $415,000 as I understand it. This is true even if you have liability insurance with a limit of $35,000.
There’s an option similar to that here, if you don’t want to deposit cash, instead you want to give the DMV some form of bond. Presumably you’d do it that way if you had a lot of cars to insure b/c you’d get paid interest on the bond. But if you just want to self-insure one car apparently a deposit of $35K does the trick.
Yeah 5 million would put a dent in the checking account but if I ever ran into you I’d be glad I had under-insured coverage. I dunno, item F, G, H, or something like that. I know stuff is high out there but I pay around $300 for six months with the high limits required for an umbrella. The car that just sat was about $100. The car values don’t seem to make much difference in the cost. A car is a risk regardless of value.
Typically in a case like that, the lawyers will only go after those assets that can quickly be converted to cash ( bank & investment accounts, etc.) And they’ll put liens on any real estate.
That so reminds me of the dram laws in Ohio, you could sue a bartender for over serving, but chances of collecting were next to nil
My wife just retired as a plaintiff’s attorney after many years. One of her criteria in taking a case was the collectability of any judgment she might win, because until the client gets the money, she didn’t get paid.
Thank you for that i think
Is that for each car ?
Or unlimited # of cars?
Or is it for each driver ?
Or unlimited # of drivers?
Self-insuring (for $35k??) might serve your needs in the event that only vehicular damage takes place. However, once there is bodily injury, you would be putting yourself in the potential position of losing your home and your savings.
Several years ago, I increased the deductible on my car insurance to $5,000 in order to reduce my premiums. My reasoning was that because I haven’t had an accident of any kind since 1970, and because I could cover that $5k from my checking account without taking food off of the table, it was worth the “gamble”.
Perhaps this approach is something to consider.
Yeah, agreed. I’d be kind of afraid to drive with only 35k at my disposal should I screw up. Just a couple of days in the hospital for the guy you accidentally rammed could easily go far above that.
I carry $250,000 each in bodily injury and property damage liability insurance, which ordinarily I would think is too low (cause a wreck that makes a city bus or a TV stations’ live van crash and you’re in it for more than a quarter mil) except that I also carry a $1m umbrella policy which kicks in after other policies hit their limit. I’ll probably never use it, but if I ever do have to, I’ll be very glad I bumped it up.
I’d only consider self-insuring my vehicle if I had at least half a million to put aside.
George, I’ve done it for a period of about 20 years. Trust me, you don’t want that concern hanging over your head. I sleep much better with conventional insurance coverage. They also have a lot of leverage when it comes to settling claims to help shield their insured from additional damages. In the end, qualitatively, you don’t save that much to make it worthwhile. And there is a TON of risk…
The kind of self insurance you’re considering is about the worst idea I’ve heard.
First, you’re risking not only all your personal assets but also your future assets, including future income.
Next, Motor Vehicle Laws vary by State so what’s acceptable in your home State may not be in another State. So for example, if you’re driving down 95 and ticketed in my State without proof of insurance, your car will be immediately impounded and you’ll be free to find your way home on foot from the nearest exit. And that’s assuming that there’s not another issue that would want them to extend your stay.
Finally, if you actually do have an accident part of what your liability insurance covers is the cost of a decent attorney to defend you, which at $400/hour mounts up amazingly quickly. Just your first meeting and initial preparation could easily hit $4,000 so you should expect a retainer of at least $10,000 cash and if it goes to trial, well the attorney’s fees will knock your socks off.
If you want to reduce your premiums a much better idea is to shop the policy, keep a good driving record, drive a car that’s easy to insure and if you can afford it, consider increasing your deductible and reducing your comprehensive,
What makes you think you don’t have proof of insurance? The state provides you with the same evidence of insurability whether conventional or self-insured.
The rest I agree with. Self insurance is really designed for larger businesses that can afford all of the baggage that goes along with it. It’s not really designed to work for individuals…
A good point. Part of what you get with a policy is free lawyers to represent you. So it’s like a retainer.