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
Policy provision designed to restore an insured to his or her original financial position after a loss. The insured should neither profit nor be put at a monetary disadvantage by incurring ...
Coverage for damage due to peril! of war, usually written as part of an ocean marine insurance policy. ...
Coverage under life and health insurance policies for dependents of a named insured to include a spouse and unmarried children under a specified age. Under some life insurance policies an ...
Sum of insurance provided by a policy at death or maturity. ...
One of four types of risks affecting the life insurance company as identified by the society of actuaries. This risk is associated with losses that the life insurance company may incur as ...
Method of terminating a split dollar life insurance policy by the company transferring its interest in the policy (after the company has effected the largest policy loan permitted equal to ...
Coverage for a practicing physician, surgeon, or dentist, when bodily injury, personal injury, and/or property damage is incurred by a patient and the patient sues for injuries and/or ...
Maximum age of an applicant or insured beyond which an insurance company will not initially underwrite a risk or continue to insure it. For example, under some forms of renewable term life ...
Deferred annuity under which one premium payment is made and the annuity is paid up (no further premium payments are required). ...
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.