Self Insurance
Definition of "Self insurance"
Protecting against loss by setting aside one's own money. This can be done on a mathematical basis by establishing a separate fund into which funds are deposited on a periodic basis. Through self insurance it is possible to protect against high-FREQUENCY, low-severity losses. To do this through an insurance company would mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies.
Popular Insurance Terms
Process of analyzing complex personal and business cases according to tax and estate planning requirements to determine life insurance needs. The family life agent or underwriter normally ...
Insurance company that restricts its underwriting of risks to one state. ...
Dollar ceiling on a life insurance policy for applicants who are not given a medical examination. The insurer accepts a health questionnaire in the place of a physical examination. At one ...
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Choice of beneficiary in which the death benefit of a life insurance policy is retained by the company to be paid as a series of installments of fixed dollar amounts per installment until ...
Coverage for items of property being delivered to a customer. The means of transportation covered include such common carriers as aircraft, railroads, trucks, express carrier, and other ...
Cooperative organization among insurers that rates and prepares new policy forms according to guidelines and regulations of the state insurance department. Loss experience, collected ...
Trust in which rights to make any changes therein are retained by the grantor. At the grantor's death all rights become irrevocable. This type of trust has several advantages: it can avoid ...
Coverage on an all risks basis for physical damage loss. Coverage applies to property damage to the insured boat or damage caused by the insured boat to a third party boat. Excluded perils ...
Comments for Self Insurance
Our company is in the business of constructing homes. We own some 25 houses we lease. We are willing to cover the cost of reconstruction of the leased properties as a the limit of insurance. However here in Texas there are two ways insurance companies write policies - ACV (actual cash value) and 80% coinsurance. We would like to set up a trust account to self-insure the properties. What are the tax imprecations of a trust fund as the third party insurer of our properties?
Aug 13, 2018 16:55:11Charles,
we believe there are several complications to your plan. A self-insurance is typically used to protect against damages that are frequent but are not substantial price-wise. Home construction damages are usually not inexpensive; we're not even sure if it's possible because of labor union's rules etc. We suggest you talk with an accountant about the tax implications of self-insurance and also with a real estate lawyer to check not only if it's possible but viable. Good luck!
Aug 14, 2018 11:03:37Have a question or comment?
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