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
Educational organization for insurance women whose objective is to further the interests of these women through education and adherence to professional ethics. ...
Hazard covered under catastrophe reinsurance. This form of excess of loss reinsurance protects the ceding company for loss above the retention limit caused by multiple catastrophic events. ...
Return of a prorated portion of premium after a policy is canceled by the insurer. Under most property and liability insurance policies, the insurer can cancel at any time but must return ...
Provision used to avoid duplication of coverage in other policies; to eliminate coverage for property under the care, custody, and control of an insured business; as well as to avoid ...
Coverage for personal property of a manufacturer on an all risks basis when that property is off the manufacturer's premises. ...
Length of time required to amortize the excess expenses of acquiring a given group of life insurance policies. In acquiring a policy, a life insurance company may incur expenses (such as ...
Transformation of a stock insurance company into a mutual insurance company, in which the stock company buys up and retires its shares. ...
Property owned by two or more parties in such a way that at the death of one, the survivors retain complete ownership of the property. ...
Trade group of independent claims adjusters who settle claims for insurance companies on a fee basis. Some insurers use their own staff adjusters to settle a claim. Others use an ...
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.