Self Insurance Successful Experiences / Stories?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
beaverlodge
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Self Insurance Successful Experiences / Stories?

Post by beaverlodge » 30 Jun 2006 09:28

Anybody got any factual experiences of people who have successfully self insured?

This would mainly be in the life side and third party liability.

One would think that a parameter would be at least $500,000 of assets accummulated and set aside to meet potential liabilities that would include at least legals and family security obligations

My inquiry is not about theory, theory that often falls short of reality but actual experiences.

It is understood that those who have accumulated substantial wealth have options in this respect (whether they use those options or not ) that the majority of the population do not.

Who has self insured?
For what?
How much?
How did they do it?
Problems on the this route?

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Re: Self Insurance Successful Experiences / Stories?

Post by jiHymas » 30 Jun 2006 10:03

beaverlodge wrote:Anybody got any factual experiences of people who have successfully self insured?
I am self-insured against the risk of meteorites falling on my head while I am wearing a blue tie and socks with polka dots on them.

Thus far, my experience with self-insurance has been most satisfactory.

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Post by Shakespeare » 30 Jun 2006 10:05

I am self-insured against the risk of meteorites falling on my head while I am wearing a blue tie and socks with polka dots on them.
Suggest you apply some of the premium savings to a new wardrobe. :wink:
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Post by adrian2 » 30 Jun 2006 10:48

I have self-insured myself against trip cancellations, 100% success rate.

I have self-insured myself for "extended warranties", 100% success rate.

I have self-insured myself for extra health insurance when travelling out of province or in countries where the cost of medical care is significantly less than in Canada, 100% success rate.

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Re: Self Insurance Successful Experiences / Stories?

Post by Norbert Schlenker » 30 Jun 2006 12:23

beaverlodge wrote:Anybody got any factual experiences of people who have successfully self insured?

This would mainly be in the life side and third party liability.
I self insure on life. The irony is that, until I was forced to think about needs analyses in order to get an insurance license, I blithely paid term insurance premiums every year. I didn't really think about it because, after all, it was just a few hundred bucks a year. Doing one needs analysis for a fictional client immediately caused a "Doh" moment.

I insure for third party liability (house, auto, boat). Canada is not a particularly litigious country but multi-million dollar awards are not unheard of. Such an award against me isn't likely but, if it happened, it would hurt badly. So I insure.

The only other insurance I buy is travel medical. We are out of the country a fair bit. I'm sure my view is coloured by smashing my wrist into a hundred pieces in Singapore four years ago and seeing a US$12k bill (all reimbursed under an employer provided policy at the time). $12k isn't ruinous but it could have been my neck rather than my wrist and then it wouldn't have been only $12k. I am sure that there is negative expected value for this insurance. At a premium of $89 a year, I don't much care and pay it.
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Post by kcowan » 30 Jun 2006 13:02

I have done Adrian's first two. We get travel insurance for the US and Europe. (So far a complete waste of money.) We self-insure for our possessions such as jewelry and electronics that are severely limited in our contents policy. We self-insure for the deductible in all existing policies.

I still have too much life insurance and will be cancelling them over the next year (thanks Norbert). The biggest risk right now is if we have a medical emergency during a power failure (19 stories up with an elevator that has no backup power). Fortunately, we have only had one power failure in 10 years.

Also I am a director on three private companies with no DE&O insurance. I am highly dependent on the continued solvency of RBC, CIBC, Canaccord Capital, TDW and Industrial Alliance as well as their related investor insurance schemes. I am dependent on the survival of CPP, OAS and IBM.
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Re: Self Insurance Successful Experiences / Stories?

Post by Bylo Selhi » 30 Jun 2006 13:02

jiHymas wrote:Thus far, my experience with self-insurance has been most satisfactory.
Reminds me of the joke about the guy who fell off the top of a skyscraper. As he passed the 10th floor a spectator asked how he felt. "So far, so good!"
Norbert Schlenker wrote:At a premium of $89 a year, I don't much care and pay it.
Wait until you become a senior.

BTW, who's the insurer?
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Re: Self Insurance Successful Experiences / Stories?

Post by Norbert Schlenker » 30 Jun 2006 13:23

Bylo Selhi wrote:Wait until you become a senior.
Yeah, it's a problem when you're over 65 but it's hard to be too sympathetic given things like fee waivers on bank accounts and extra tax deductions and OAS and [the list never ends] ...
BTW, who's the insurer?
Allianz. You have to have a BMO Mastercard and add the feature. Claims are handled by World Access in London, Ontario - the same outfit that okayed putting my arm back together in Singapore (but I admit that the Mastercard policy is not the policy that paid for Singapore).
Nothing can protect people who want to buy the Brooklyn Bridge.

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Post by brucecohen » 30 Jun 2006 14:00

I've self-insured on home and car by getting the highest deductible offered -- $2,000. Success rate: 100% I keep debating about dropping the collision coverage on my 7-year-old but haven't, in part because my inner irrational self tells me I'll have an accident right after I do it.

Life insurance is often sold to fund funeral expenses. In that respect, I'm self-insured. (I have no life insurance at all aside from the CPP death benefit -- no need for it. Yes, no need for it).

I too self-insure in declining extended warranties. Success rate: 100%

I'm self-insured in terms of accidental death and dismemberment. Never could see a reason to buy it. Success rate: 100%

I'm self-insured in declining critical illness coverage. Couldn't get it anyway given that I've had a heart attack and a family history of heart disease. Also know from personal experience -- and volunteer work with other heart attack patients -- that a heart attack need not be the financial disaster the insurance industry keeps telling us about.

I'm self-insured in declining to buy long-term care insurance. Rejected the idea when I checked into it and found I couldn't get a policy with a lifelong schedule of guaranteed rates and good inflation protection. My planning calls for the sale of my home to fund any LTC costs.

I used to carry disability insurance. Dropped it when I retired because I no longer have to worry about replacing an income.

I used to self-insure for medical expenses. I am now covered by my wife's group plan. I'm pretty much breaking even. I currently lose a bit of money because my premiums have exceeded my expenses but one unexpected major bill or dizeable increase in the price of my maintenance medication could tilt the table.

I self-insure in declining travel cancellation insurance. I might be in the red there because a few years ago a medical problem forced me to cancel a hiking trip and a $500 airline ticket ended up going to waste. I don't know where I stand because I have no idea how much trip cancellation insurance costs.

I do not buy out-of-Canada medical insurance for trips of less than two weeks because I'm covered through my credit card. I'm also covered by my wife's group plan but it works on reimbursement. If I was travelling to a high-cost country for more than 2 weeks I'd probably buy out-of-Canada medical coverage if I could get it for $100 or less. Reimbursement plans take forever to settle on foreign claims. Also, wife's group plan carrier surprisingly offers no hotline/managed care facility. If I have a major medical emergency in a foreign clime I'd much prefer having a local care manager take over and handle all the arrangements.

I'm self-insured for my dog's medical expenses. I've twice looked at pet care policies -- first when they came out and again recently when I got free cover for a while after adopting a dog from a shelter. Too many exclusions, conditions and limits.

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Post by Bylo Selhi » 30 Jun 2006 15:03

Home and car are each insured for $2M liability. We have an umbrella policy that takes that up to $5M. I'm not aware of any home/auto liability claims in Canada that have been that high (and stuck through appeals.) The home policy has a $1k deductible, which is the highest the insurer offers. I'd have gone for $5k or $10k if available. Likewise the Subaru (3 years old) has $3k deductible and the Honda (10 years old) has no collision/comp. coverage. IMO insurance is meant to cover catastrophic losses, not trivial stuff that you'd probably never claim anyway for fear of a premium increase.

I have $200k term life insurance through my company only because as a partner our group benefits plan requires it. If I had my druthers that would go. I took myself off the disability coverage even though the premium was paid by the company so I at least don't have to pay income tax on the premium. We've kept the extended medical (pharma, out of country, et al) and dental. When I was working full time I took myself off EI. It's optional for shareholders of a private company and I couldn't see myself lining up for EI if I somehow lost my job. (Don't laugh but I actually fired myself a few years ago so that some of my severance could be rolled into an RRSP.)

No critical care or long term care coverage. Funerals are self-insured. They'll be modest in any case.

Never bought an extended warranty on anything and never regretted it(*) (One exception was on our old, old hi-eff NG furnace. There was (still is?) an anomaly in the gas company's (Enbridge) coverage in that all furnaces are the same price, around $100/year. That furnace was so flakey that I got more than my money back every year. The new furnace, a Carrier, is still on its 5-year warranty. I have no plans to extend that.

Never bought trip-cancellation, car rental CDW, out-of-country medical (apart from the employer group benefits plan), etc. coverage and never regretted it. Only had one claim (a stone chip in the windshield on our recent Vancouver Island trip that's now working its way through the VISA bureaucracy.)

Never bought overdraft "protection", credit-card loss notification, job-loss coverage or any of the other crap that's on offer with every statement. Never bought flight crash insurance at the airport. Never needed any of that stuff either.

No company pensions but a healthy RRSP loaded to the gills with RRBs and XSB. Although I have no doubt that CPP will be there when we need it, we've arranged our financial affairs so that it's unlikely we'll really need it. If OAS gets completely clawed back I'll drink to our financial success rather than bitch about the greedy feds. What's left when we're both gone will mostly go to charity. Maybe they'll name a park bench after me :twisted:

(*) A few days ago I bought a pair of headphones at the local Radio ShackThe Source on sale at $20. The checkout clerk offered to sell me a 3-year warranty extension for $10. Are people really that stupid?
Last edited by Bylo Selhi on 30 Jun 2006 21:07, edited 1 time in total.
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Post by YogiBear » 30 Jun 2006 16:18

BruceCohen wrote:I'm self-insured for my dog's medical expenses.
Have you thought of a term life policy on your dog- to pay for funeral costs and help settle its estate? :wink:

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Post by brucecohen » 30 Jun 2006 17:20

YogiBear wrote:
BruceCohen wrote:I'm self-insured for my dog's medical expenses.
Have you thought of a term life policy on your dog- to pay for funeral costs and help settle its estate? :wink:
No but I have been concerned about the deemed disposition tax bill that'll come due when she dies. Her food and water bowls, leash, collar and any toys that haven't been destroyed will no doubt have a higher market value then than now. I wonder if Norwich Union would do a guaranteed issue whole life policy on a dog. Hmmmmm

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Post by OtherWise » 30 Jun 2006 17:32

While I, too, self-insure for many of the things others have mentioned here, I'm very glad that we have car insurance. When my husband (a 56-year-old ultra-distance cyclist) was hit by a truck when he was on a training ride last year, the insurance company couldn't do enough to help him get back on his feet (he's not yet back on his bicycle - but that's another story)

He broke his hip and damaged an optic nerve. Insurance covered home care, attendant care, daily visits from a nurse who monitored blood clotting levels, physio three times a week for more than a year, replacing bicycle parts and clothing, glasses to correct the double vision he suffered from the optic nerve injury, weekly disability payments and a host of other things. He's now back to about 90% of his pre-accident abilities. And, our insurance premium did not increase!

By my calculations, we've probably received back more than we have ever paid in premiums in the more than 20 years we have been with this insurance company. Like Bylo, I insure primarily to cover catastrophic loss. This could have been a candidate!

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Post by kcowan » 01 Jul 2006 10:35

YogiBear wrote:
BruceCohen wrote:I'm self-insured for my dog's medical expenses.
Have you thought of a term life policy on your dog- to pay for funeral costs and help settle its estate? :wink:
Yes now that you mention it, our major medical expense has been $2300 getting a 6-year old cat back to good health last summer. Talk about unexpected expenses! Got to keep the old car for a couple more years now...

PS the only expense in 6 years for 2 cats, after their shots and fixing.
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Post by beaverlodge » 06 Jul 2006 10:51

What a bunch of brave posters, posters who are otherwise very good at money management.

Walking away from insurance on meteorites, trip cancellations, extended warranties, extra health insurance outside province, possessions (jewellry), A D and D, CI and LTC because of inability to get it, dogs, DI on retirement, employment insurance. That sure takes guts.

And just think, some of you have had a success rate of 100% from not insuring the above and you feel oh so good.

And one poster (OTHERWISE) so happy that they received so much more $$$$ on their claim than they paid in.

An otherwise knowledgeable group that prefers to insure the golden egg rather than the goose

Bylo is close to covering off what is needed
Norbert covers it off on third party liability.

I suspect that you will find that when push comes to shove the credit cards do not provide the protection that is needed. Exclusions prevail.
At claim time is would be distressing to look for total relief to a little plastic card.

As for self insuring on life insurance forget it. Maybe for small amounts. But try self insuring for $500,000 tax free , about an average amount now needed by many.

And if you are able to cover off that amount on any amount of life insurance likley you can do without it.

A golden egg over the Goose? Go for the Goose.

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Post by brucecohen » 06 Jul 2006 13:12

beaverlodge wrote: A golden egg over the Goose? Go for the Goose.
What if the goose has no goslings and the gander is self-sufficient?
I suspect that you will find that when push comes to shove the credit cards do not provide the protection that is needed. Exclusions prevail. At claim time is would be distressing to look for total relief to a little plastic card.
Just checked 'em. Thanks for the reminder. It's been a couple of years since I looked, though I always read the small print inserts that arrive with my bill. In any event, the out-of-Canada medical coverage on my CIBC Visa has FEWER exclusions than stand-alone OOCM policies. For example, the insurance certificate does NOT exclude skydiving and other risky pursuits, except motor racing. Does have the standard 90-day pre-existing clause though the wording is much more clear....you're covered if your condition was "stable" during the 90 days before departure. Other policies exclude conditions for which you obtained "medical advice" within those 90 days. "Stable" has a commonly accepted medical definition; "medical advice" doesn't. Other policies also exclude coverage if there's been any change in medication, even a positive change. The CIBC Visa plan doesn't exclude on that. In the event of a mishap, I or a nominee must call a hot line as soon as possible. (When my wallet is opened to see my driver license is, there's a sticker that states: Call insurance hot line for US medical emergency -- 1-866-896-5708) But hotline notification requirement is now standard for most OOCM policies. Indeed, I was amazed that my wife's group plan -- administered by Manulife -- doesn't have such a requirement.
As for self insuring on life insurance forget it. Maybe for small amounts. But try self insuring for $500,000 tax free , about an average amount now needed by many.
...needed by many who have dependents or sizeable debts. If the goose has no goslings and no sizeable debts, why does she need $500,000 of life insurance?
And if you are able to cover off that amount on any amount of life insurance likley you can do without it.
If there are no dependents or sizeable debts, why would one have to worry about covering off that amount?

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Post by yielder » 06 Jul 2006 14:07

beaverlodge wrote:What a bunch of brave posters, posters who are otherwise very good at money management.
Do you start these threads just to piss on people??????????

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Post by Bylo Selhi » 06 Jul 2006 14:28

beaverlodge wrote:Bylo is close to covering off what is needed
Norbert covers it off on third party liability.
If The Beav thinks I'm "close to covering off what is needed" then I must be way overinsured :lol:

Nevertheless here's what Norbert and I have said about our third party liability coverages. What's the difference?
Norbert Schlenker wrote:I insure for third party liability (house, auto, boat). Canada is not a particularly litigious country but multi-million dollar awards are not unheard of. Such an award against me isn't likely but, if it happened, it would hurt badly. So I insure.
Bylo Selhi wrote:Home and car are each insured for $2M liability. We have an umbrella policy that takes that up to $5M. I'm not aware of any home/auto liability claims in Canada that have been that high (and stuck through appeals.)
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Post by beaverlodge » 06 Jul 2006 16:43

You confirmed it Bylo. I said you both properly covered off the risk of third party liability. A potential big risk is being covered.

Most of the other self insured examples are insuring risks worth pennies

Goose? Gosling? Ganders? If none of them need each other for anything nothing is needed. They get their own food and their own nests - not dependent on each other.

Most people would take the goose over the golden egg. It is the human goose that needs to be well protected and insured.

Insurance? If no need, no insurance. I have no problem with that. As in everything needs have to be filled with a solution.


Yielder: I prefered to say brave. I didn't want to provoke anybody by saying c..........ds. Guess I could have said that the examples provided were hardly what one would consider gambling and were not what was asked for at the outset.

Bruce: Credit cards for protection such as you want generally have limitations. Somebody else might want to comment on that or start a new thread.

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Post by jiHymas » 06 Jul 2006 17:37

beaverlodge wrote:Yielder: I prefered to say brave. I didn't want to provoke anybody by saying c..........ds.
Canards? I thought they were geese.

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Post by brucecohen » 06 Jul 2006 21:31

jiHymas wrote:
beaverlodge wrote:Yielder: I prefered to say brave. I didn't want to provoke anybody by saying c..........ds.
Canards? I thought they were geese.
They were probably Canarda geese.
beaverlodge wrote:Bruce: Credit cards for protection such as you want generally have limitations. Somebody else might want to comment on that or start a new thread.
All travel insurance policies have limitations. As I said, I checked the limitations on the coverage from my CIBC Platinum Dividend Visa...and I even cited several in my post above...and even compared them to similar limitations commonly found on stand-alone policies. How about citing the potentially dangerous limitations found on credit card OOCM plans that aren't found in the stand-alone policies commonly sold?
Most of the other self insured examples are insuring risks worth pennies
...and provide a good example of the extent to which the insurance industry has manufactured demand. :D
You confirmed it Bylo. I said you both properly covered off the risk of third party liability. A potential big risk is being covered.
BTW, I have a $2 million umbrella liability policy issued by the company that insures both home and auto. I didn't mention it because you asked about self-insurance. I wouldn't be surprised if other posters here also have supplementary liability coverage, especially if they drive in the US. :evil:

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Increasing the deductibles

Post by Quebec » 16 Sep 2017 11:09

Resuscitating this old topic to report that I've increased my deductibles on home and auto insurance this year (to $4k and $2k, respectively). I've saved $450 in insurance premiums in total (for the year), which I've duly saved and deposited in a Small-Risk Fund, as suggested by M. Milevsky (see links in the finiki article).

There should be about $4k in the Small-Risk fund in 7-10 years, then I can stop contributing to it until a 'claim' happens.
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Re: Self Insurance Successful Experiences / Stories?

Post by IdOp » 16 Sep 2017 16:29

I increased my auto deductible from the usual $500 to $1,000. I wasn't sure if it was really enough of a move, but felt it was in the right direction. One would never make a small claim like that anyway since the insurance would just go up. Maybe I'll try $2,000 next year.

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Re: Self Insurance Successful Experiences / Stories?

Post by kcowan » 16 Sep 2017 16:36

I went with a $250 USD deductible on my health insurance for Mexico because the break even was two events. I had one event and claimed $100 over the deductible. So a good decision on carrying my own risk. In each of two previous years, I had two events. Before that, nothing for seven years.
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Re: Increasing the deductibles

Post by Quebec » 19 Sep 2017 19:58

Quebec wrote:
16 Sep 2017 11:09
(...) I've increased my deductibles (...) I've saved $450 in insurance premiums (...)
To clarify my overly simplified post:

Thinking back about the longish phone conversations with the insurance agents (the home insurance renewal was several months ago), I made other changes to my policies to get this total rebate. The change in the deductibles was the main factor in reducing the premiums, but not the only one.

1. Home: we switched from comprehensive coverage to a slightly less comprehensive form, where there are stated limits on what value they will pay for your bike, your artwork, etc. What I really want to protect 100% of is the building. I don't own a $2k TV, or a $5k diamond ring, so the new limits on some types of contents make no difference to me. The insurance company also wanted to use a reconstruction value for the building that was way more than the approximate market price of the building AND the land combined. That made no sense (the land value being almost half the property value in our case; land does not burn), and after some discussion they agreed to use the same reconstruction value as the previous year (still too much, but who knows how much reconstruction would actually cost, so better be on the safe side here). Finally there was the increase in the deductible, which was the biggest factor.

2. Auto: we have two cars insured. The older one is, disappointingly, only worth $3k on kijiji/LesPacs, so with the new $2k deductible, it did not make much sense to have accident coverage, and we only kept the $2M liability on that one. I normally would have expected to make that move (dropping the accident coverage on the older car) in a year or two, not this year, but that was the logical consequence of increasing the deductible to the highest value I was comfortable with.

Moral of the study, if you wanna save on insurance, question all the default values they use, and even maybe the type of policy, not just the deductible. But increasing the deductible is still the easiest, highest impact move.
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