Automobile self-insurance is a way to avoid paying the costs for minimum liability coverage premiums in states where self-insured auto insurance is legal. Self-insured coverage only makes sense to certain driver and/or automobile owner demographics, however. Your liability as a driver is either personal, business-related or both.
The amount of liability your insurance company is willing to pay out depends on your insurer’s policies, state laws and the amount of money you are willing to spend on coverage premiums each year. Most average U.S. drivers are unable to afford the high costs of liability payouts if forced to pay fully out out-of-pocket.
This is why some form of liability insurance coverage is mandatory in most states. Are you a business owner with a fleet of corporate vehicles? Are you an individual driver with significant financial means? If So, then self-insured auto insurance is beneficial for you.
The main benefits of choosing to self-insure your automobile(s) is the ability to save money when applicable. Modern car insurance quotes around the nation indicate the high prices of paying for car insurance regardless of the state in which you live. Funding a secured deposit account with your state DMV or state Department of Insurance requires you to make a deposit at least as large as the minimum amount of liability coverage required in your state. For example, if the state minimum coverage requirement is $50,000, the funds in your secured deposit account must also have a minimum of at least $50,000.
If you have a lot of money and are able to afford this approach you save significantly over the years by not paying high annual insurance premiums. Benefits of this approach are viable if you do not have an accident where you are required to pay high amounts of money out-of-pocket.
The benefits are also viable if the interest you lose on your $50,000 is not more than the amount you would pay for auto insurance premiums over extended periods of time.
What if you are a business owner with a fleet of vehicles? The potential benefits of having self insured car deposit accounts are also financial-based. The cost of insuring multiple corporate vehicles with liability coverage is significantly more than funding a secured deposit account. The latter benefits scenario is potentially even more plausible when purchasing surety bonds on which you are also still capable of earning interest.