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
Regulations affecting the right of insurance companies to use sex as one of the factors in the actuarial determination of premium rates. The precedent case for such legislation is Arizona ...
Health insurance contract that is renewable at the option of the insurer. On the anniversary date of the contract, the insurer has the right to decide whether or not to renew. ...
Fee paid to an insurance salesperson as a percentage of the premium generated by a sold insurance policy. ...
Measurement of how people feel about prevailing economic conditions, employment outlook, and personal finances. This index is based on statistics gathered from questionnaires mailed by the ...
Fidelity bond provided under a blanket position bond (in which each position is covered on an individual basis) or a commercial blanket bond (in which a loss is covered on a blanket basis ...
One that combines the two forms of ownership, stock and mutual. A stock insurance company is owned by stockholders, whereas a mutual insurance company is owned by its policyholders. A mixed ...
Condition that results from injury or disease that is not job related. Workers compensation applies to employees disabled by on-the-job injuries or disease. In addition, five states require ...
Trust that qualifies assets under the marital deduction provision in the Federal Tax Code for favorable treatment of an estate. The surviving spouse has the full power to use the assets of ...
Nonparticipating life insurance (also called a guaranteed dividend or guaranteed investment policy) sold by a stock life insurance company, usually as a 20-payment policy with coupons ...
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?
We're here to help.