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 designed to act as a supplement to Medicare. The supplementation is in the form of additional benefits to that provided by Medicare. The additional benefits are in the form of ...
Individual or entity who enters into a contract or other legal proceeding, such as a lawsuit. ...
Federal agency that researches injury and illness arising from workplace hazards and recommends standards for maximum exposures to hazardous substances. ...
Physician who conducts physicals of applicants for life and/or health insurance. This physician is selected by the insurance company at its expense. ...
Indemnification bond under which a stock certificate holder who loses the original certificate will be issued a duplicate. The indemnity bond guarantees that if the original stock ...
Stipulation that no claim will be paid until a loss exceeds a flat dollar amount or a given percentage of the amount of insurance in force. After the loss exceeds this dollar amount or ...
The term elevator collision insurance or elevator liability insurance is included in business liability insurance policies in order to cover potential damages suffered by the elevator or ...
Damaged insured property in receipt by the insurance company resulting from abandonment and salvage, subrogation, and reinsurance. ...
Part of an ocean marine policy that provides coverage of goods through all of the stages of a journey. Coverage begins when goods leave the warehouse of a shipper, and continues until they ...
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.