Is there a mechanism where I don’t pay payments for car insurance, but I just have an agreement with a company to pay for extreme tragedies (while paying for minor accidents myself), and then start making big annuity payments to the company for a long while after the tragedy? Never mind the details, or whether this idea is a good one or not, I am just wondering if this exists and could it be legally satisfying in the same sort of manner that putting up a treasury account as collateral would be. Thanks.
What would prevent clients from declaring bankruptcy after they incurred a large loss? Maybe one of our lawyer dopers will tell us if one can sign a waiver for declaring bankruptcy that would prevnt this from happening.
Yeah its called being filthy rich!
Insurance is one of those things you must pay for before you actually use it.
Under the agreement you suggest, what’s in it for the insurance company–they would be on the hook to pay the large claim but they will not have collected anything from you until after the fact.
There may be some states or insurance companies(maybe) that would allow you to post a bond or transfer a large block of assets to them to guarantee claim payment. But the cost of the bond or loss of earnings on the asset transferred is likely to be significant and approach or exceed the cost of just buying the insurance.
If you had such amounts, then buy the absolute minimum coverage required by the state, and be prepared to pay any larger claims from those assets.
You are talking about a hybrid of “Self-Insurance” and “Reinsurance.” Can’t say as I’ve ever heard of any such product but, shit, you might be just about to become rich!
“Self-Insurance” is, as has already been so elegantly put, the same as being “filthy rich.” Thank you for using the correct industry terminology, SunTzu2U. The company for which I work, for example, self-insures their company cars.
“Reinsurance” is a less known (to schmoes like us) concept wherein a number of insurance companies share in joys and woes of a particular “risk.” The New York World Trade Centers, for instance, were insured. Had there been only one company covering the complex, you would be familiar with its name because it would be a former insurance company. In reality, some REALLY lucky/suave agent for, call it “Shifting Sands Commercial Ins Co” sold a policy on the complex covering it for One ZILLION dollars. He got rich off the comission and moved FAR away from New York. Meanwhile, the underwriters at SSCIC went to work accepting a portion of the $1 Zillion, and finding other carriers to accept a portion of the coverage (and commensurate premium). Ultimately what you get is a Frankenstein assembly of coverage that totals the reconstruction cost of the buildings.
For your purposes, YOU will be the Shifting Sands Ins CO. and will accept liability damages up to a certain threshhold (you cry “uncle” at $50k). Bad Bertha Ins Co of Bethesda accepts liability payments between $50k & $500K, and so on.
You will still need to pay premiums to the reinsurance companies, but the premiums would be pretty small since their involvement would only come in the most dire of circumstances.
For you? Get a PLUP and pay it monthly.
Auto insurance claims can easily be in the hundreds of thousands of dollars, even millions, what do you suppose the payments will be? If you are killed in a serious accident that is your fault, how could you possibly make any payments.
Yeah, as I was thinking more about this, there would need to be some small payments every month or so, to compensate the company(s).
I really like that distribution of risk to several companies… reinsurance, sounds good. Where do I sign up!?
HermanandBill: Maybe the company(s) have first right to your estate if that happens? Maybe you have to retain good credit to acheive continuing qualification for this… so they will be able to secure assets at the time of your death. Or maybe your life insurance money could be collateral for this risk? Yes, that would create a huge risk for your surviving family, but, that’s why I don’t drive like an moron…
That’s why it’s called a loan. Just like any other loan, they’ll get their money back, plus interest, down the road. It’s an investment, and the company is probably happy because this type of investment is really risky, thus really compensatory in terms of rate.
This would be for people who are really careful drivers, and think that paying for something they will probably never use is ridiculous. Also, people who are risk averse.
Another alternative is I believe in my state that you don’t need car insurance if you post a cash deposit with the state. It’s called self insuring.