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
Same as term: Beneficiary; Beneficiary Clause: ...
Value in life insurance policies that entitle the insured to these choices: to relinquish the policy for its CASH SURRENDER VALUE. (Note that in the beginning years the cash value may be ...
Policy that pays a specified sum not related in any way to the extent of the loss. The term applies to a life insurance policy rather than to a contract of indemnity because the former does ...
Partnership in which family members hold all interest in the partnership. This partnership is treated as a cash flow through stand-alone entity. All sums of income and credits, as well as ...
Specific date determined by the Internal Revenue Service on which a beneficiary has received a death benefit from an insurance company, an annuitant has received an income benefit, or a ...
Dwelling insurance is how it’s called the most obvious coverage type under the homeowner’s insurance umbrella. It deals with the damages done to the physical structure of the ...
Provision in some disability income policies that provides a monthly income benefit to a disabled insured for as long as he or she remains disabled according to the definition of disability ...
Calculation of insurance premiums based on an age less than the current age of the insured. ...
Loss caused by two or more perils. A certain amount of controversy exists when one of the perils is insured and the other peril is excluded from coverage. Some courts are beginning to find ...
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.