P13 – Self Insurance
0:00
OK, so today, I’m going to go over self insurance.
0:04
It’s not for everybody, but it’s based on the idea that you have the right to contract, you have the right to associate yourself with whoever you want, and you have the right to enter into agreements that are not against public interests.
0:18
That don’t harm people, other damage, property, harm, people, things like that. You have the right to do those things.
0:23
So, self insurance is nothing special, nothing different.
0:27
All you’re doing is your creating a means and documenting a means by which you can compensate someone, if you injure him while driving. So hopefully, it’s a safe bet, so this is the consideration you want to have.
0:41
If you’re going to do this, you want to, you, it is because probably, you want to get away from these insurance companies, but you’re going to take on the risk yourself.
0:48
Now, you can manage it, but it’s not, it’s not for everybody, like I say, as I’ll explain.
0:55
So what’s, here’s what you really need. You need the ability to pay.
0:59
If you injure somebody now, that doesn’t mean if you injure somebody it’s that day the immediate might take years before you end up ever having to pay.
1:09
And the payment would be within the statutory limit. like 30 or $40,000, it’s not going to be like you have insurance with Geico.
1:18
Someone sues you for a million dollars and gets $500,000, it won’t be like that.
1:23
They won’t, that money will be there, there’s no legal duty free to do that, it’s just that the insurance company, that’s how it operates.
1:29
So we don’t have to operate that way. Because you’re, you’re not an insurance company, when you’re doing this.
1:32
You’re just providing financial responsibility, so the obligation is, assuming the statute’s on car insurance are even legal.
1:41
I know that that’s the going policy right now, the current policy on how it works.
1:46
Let’s not talk about that right now, but we’re assuming that’s all proper.
1:51
You want to have the ability to compensate someone. You want to have the ability to take financial responsibility.
1:57
So it’s not insurance per se, it’s the ability to be responsible financially and compensate someone for damages.
2:03
All right, um, so what you need is, you need a company that you can register, that you own.
2:11
This is Civil version, and you need evidence of financial responsibility.
2:15
Like if you ever stopped, you know, for a traffic ticket or something, you know, the cop’s, they ask, you, let me see an insurance card, right? What they really want is evidence of financial responsibility. Here’s what they consider evidence.
2:26
A little card.
2:27
It’s got your name, your car description, your van, your address, and the types of insurance coverage you have on the back.
2:32
Pretty much, that’s evidence of financial responsibility.
2:35
You can create that on your computer, but you should have some, you can’t just have a card.
2:41
You should have the ability. So that’s why I say you need a company.
2:44
And it needs to hold assets that are fairly liquid.
2:48
You should be able to get access to cash quickly, so that’s why I like using precious metals or property, some type of property.
2:54
I’m not saying real estate, but something that can be sold, or you can use cash, it doesn’t need to be the whole $40,000, It could be $20,000 in cash.
3:04
It can be $5000 in Silver that you have set aside for that purpose. And, yeah, that is under the statutory limit.
3:11
Chances are, you can always make up the difference in some way, OK?
3:15
I mean, if you want to, if you want to be, I’m not trying to comply with the statute, I’m just trying to comply with the spirit of what they’re trying to do, so that you have financial responsibility.
3:23
So you can testify if you have to, and meet the legal requirements of having insurance without being a victim of the insurance industry.
3:34
So as much as you want to avoid being a victim of the insurance industry are being exploited or paying all these premiums, you still have to realize that you’re taking on some risk.
3:42
There’s some serious risk here because if, if you mean, you have to pay for things like that, you would normally pay with your deductible So like a shopping cart smashing into your car or a little bumper, things like this. You know, the parking lot.
3:56
Key key scratches on your car, vandalism, things like that. These are things you have to pick up, you have to cover those, which you would normally cover anyways.
4:03
The difference is, without a third party insurance carrier, your rates won’t go up. That’s kinda nice.
4:09
But imagine having a catastrophic injury being in a car wreck your car flips, and rolls over the, you know, the embankment, and to injure somebody else.
4:18
And now you’ve got this catastrophe.
4:21
And you’ve taken on that risk. And so that’s why I say it’s not for everybody.
4:25
This self insurance, what I’m describing here does not cover catastrophic. So you really have to consider this.
4:30
Do you want to cover catastrophic?
4:34
In my situation, like I would, I would be willing to cover my wife because, I mean, as much as I don’t like her driving, she does the safe driver.
4:44
Safe enough. And so I cover her, Mike. My company covers her.
4:49
I taught her how to drive. So in that sense, I have to take that responsibility.
4:52
I think my mother-in-law, on the other hand. I love her, but I’m just not going to cover her. And everybody laughs when I say that. I just don’t like how she drives. She makes me nervous. And I’m not, I’m not very nervous when I drive a car.
5:03
So when I’m weather, if I’m in her car, I’d probably get nervous the way she drives, so I will not cover her. She has her own things. She doesn’t care. She, she pays a third party insurance company.
5:12
So that’s always a family joke. Just keep that in mind. It’s real, it’s a real thing. It’s not a joke. You are seriously taken on a big liability here.
5:23
Alright, so you risk someone being, you know, someone’s suing you so someone could sue you and then your company would be the one to compensate the individual.
5:31
So you could have an attorney represent your interests.
5:34
You could have an attorney represent the company, or you could choose not to because you’re limited liability is the statutory limit.
5:42
I mean, let’s say someone sues you for a million dollars and your company is only only covering you for the statutory limit, which is 40,000.
5:49
Right, so this could be leveraged, where you could negotiate, what the attorney said.
5:53
Look, my insurance company’s private company, it’s not trading on Wall Street, OK? It’s only going to compensate your client 30 or $40,000, do you really wanna go forward with this? So you actually have a little bit of leverage being sued, but it is a possibility that you’ll have to deal with something like that. I have never had to, I’ve been doing it, let’s see.
6:10
Oh.
6:12
20 years self insured.
6:14
So I’m a safe driver, so I’ve been in a couple of little small things, but usually, it’s the other guy that has to pay.
6:22
I would just hope that, if someone else has self insurance, that he’s going to be responsible.
6:26
If he enters my car, you know, the insurance companies, for the most part, have paid, have, you know, if I, if someone’s damaged my car, I’ve been able to get compensation.
6:36
So hopefully, if people do use self insurance, they are going to be irresponsible.
6:40
If I injure somebody, I’m definitely going to make make good on it, OK, so that’s just my personal ethic.
6:48
So when you register, give an example.
6:51
If I register in Florida with self insurance, what will happen is the DMV once proof of that, right. So it wants the insurance card, and it has to have an insurance code. I’ve never tried it without the insurance code.
7:04
I don’t know what your state is, but in my state, Florida recognizes self insurance because we have the rights contract. Every state is like that.
7:11
The insurance code for self insurance in the state of Florida is 11111.
7:17
It’s a series of five ones. It’s very easy. It’s on my insurance card. Show.
7:21
That to the DMV people, I show that when I buy a car, the dealer wants to make sure that I’m covered, and this sort of thing, and they’ll call the number on the back. I mean, I just have voicemail on the back, I don’t even think my numbers good anymore.
7:32
It’d be funny, though, if you put your phone number on the back and then you get the dealership buying a new car and he checks to make sure you have insurance, and then he calls you and your phone rings right there.
7:40
You know, You can just tell him, look, this is my company, I’m self insured, and he’ll be like, OK, so that shouldn’t be a problem.
7:46
I mean, if you didn’t have a problem with a dealer, I’ve never had a problem. But if you had a problem with a dealer, and the self insurance thing, you could just tell them to deliver the car to your house, and it might cost you 100 bucks or something.
7:57
But he won’t then require you to have insurance if he delivers the car vetoes at tier into your driveway than that issues resolved. So I just wanted to mention that just in case you’re in that situation. So here’s what I’d like to do this.
8:09
The way I like to do it is, I use a limited liability company and I’m going to, the limited liability company is the insurance company.
8:23
It doesn’t follow anything. Again, it’s a pastor. It’s just a holding company that’s gonna hold assets.
8:27
I’m going to make it the general partner in the field owner. Now, I don’t always do it this way, but this is probably my best recommendation.
8:35
I’m going to use a limited liability partnership as the owner for each vehicle.
8:40
You can do this with a debt, a loan on the car, or not, every state’s a little bit different.
8:46
And I would make the insurance My insurance company.
8:50
The LLC, I would make that the general partner in the limited liability partnership, and I would make myself the limited partner, and then that partnership is registered as the owner of the vehicle.
9:01
If you want to title it in a, in a structure, it’s not necessary, I think you can title the car in your name and be just fine. I do that too.
9:10
I’ve used different examples, so just play with that. I mean, I can create this structure for you if you want to just let me know, All right. So that’s the simple version of it. It’s actually, you know, I’ve used it pretty well for 20 years. I Would recommend it, but again, you gotta be aware of the risks. And I’m not covered for catastrophic right now. I probably should consider that. I think it’s a good responsible thing to do. But for right now, I mean, this works.
9:34
And if you want some more details, of course just asked me. I know I’m going to do a follow up video here. So, alright, so that’s good for here.
9:40
I’m going to stop right here.