Self Insurance in FL?

Question

Good morning, I'm still looking into the risks associated with becoming self insured in Florida/doing research, but thought I'd reach out to the experts. Do you have any advice, cautions, resources where I can gather more information to develop a relatively complete understanding of the topic? Here's the FL website (info is just qualifications & process) :

https://www.flhsmv.gov/insurance/self-insurance/natural-person/

Jason Bott · Answer

Rachel, basically, self insurance means you retain your risk instead of transferring your risk to the insurance carrier in exchange for premiums.

If someone does not have health insurance, they are self insuring on medical coverage.  Same with Life insurance.  It works out for some and not for others.

From a Liability standpoint, you would need to respond to any suit that brought against you.  Pro - you don't have insurance premiums.  Con - you have to retain a lawyer if there is a suit and be on the hook for any settlement.

On the Property, you save the insurance premium but would pay for any damage or loss to your home or rental.

John Thedford · Answer

Why go that route. Insurance is relatively inexpensive.

Zachary Paschke · Answer

@Rachel E. Krawcyk I was previously a claims adjuster for a large auto company. Keep in mind I’m not a lawyer, so this isn’t legal advice, just practical insight.

The largest risk an insurance company takes is to indemnify you. As @Jason Bott pointed out, the concern is not owing a judgement, its being drug into court. Insurance companies have resolving complaints down to a science. Trying to handle it on your own is a bit like hiring a piecemeal roofing crew. You can do it, but the insurance is a discounted service plan. The best part is they specialize in it. Seeing the operation from the inside is pretty incredible. Because of this I would recommend at minimum carrying minimum state liability limits.

With that said you should obviously do what you can to protect your assets, but any lawyer with his salt will make quick work of a revocable trust. FL is a great state for homestead protection, so that’s a good move to make. My state is terrible with homestead protection!

Life insurance is a great place to protect money as are ERISA protected retirement accounts. You’ll want to specifically ask your lawyer what are the best ways to protect the money. Keep in mind any legal entity status can be called into question by the courts.

Rachel E. Krawcyk · Answer

@Paul R. Thank you that is definitely a consideration (and risk). I'm curious (and will email my lawyer, but will post here just in case it helps others) whether having assets in a revocable trust (aside from homestead and retirement accounts) helps to protect them in such an instance.  (I know it protects the heirs of the trust from creditors.) I'm just learning about these things and appreciate everyone's input, recommendations, and thoughts.

Paul R. · Answer

@Rachel E. Krawcyk

I would never self-insure for liability unless I had no assets and planned on never having assets.

Unvelievably bad things can and do happen. Like someone else said, insurance handles the defense (very tiresome and expensive) and puts up the money for settlements and judgements.

With self-insuring a property or auto itself, the maximum potential loss is finite.

Rachel E. Krawcyk · Answer

@Jason Bott

Thank you for the response.  This is for autos but yes the statute requires you to be the owner, which we are... planned to understand the risks & rewards and then look at how we can apply it to our property (since we'll begin paying off a few starting next year).

Rachel E. Krawcyk · Answer

@John Thedford

Exploring my options.

Rachel E. Krawcyk · Answer

@Melvin List

No property in question.  This is adjusting my current insurance policies.  Florida has a self insured option which appears to be available for auto.  I haven't found options in self insurance for other areas yet.

Jason Bott · Answer

@Rachel E. Krawcyk  I have several FL clients who self insure the Property (Hurricane and Fire) & Flood coverage.  It is not recommended to self insure for General Liability.

As @Melvin List hinted, if there is a lender involved, they will not allow you to go without coverage.

Melvin List · Answer

@Rachel E. Krawcyk I assume you are purchasing the property with Cash?

Self Insurance in FL?

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