before I get yelled at, I completely understand that its incredibly impractical and stupid, but HYPOTHETICALLY
if a rich person had 200k-300k saved up on the side for emergencies as such, would they absolutely NEED property and liability insurance? could they go without it?
can a person in america live without property+liability insurance
byu/Intelligent_Bite_519 inInsurance
Posted by Intelligent_Bite_519
12 Comments
Sure!
What is said person’s name and address?
When you have that much saved up there is some sort of self insurance you can do in a lot of states
Yep. It’s referred to as self-insurance, and it happens all the time.
Occasionally it is the right decision. Depends on your risk appetite, your liabilities, your financial position, all sorts of things.
As you say, it’s generally a terrible idea. It does happen though.
a bunch of states allow you to “self insure” if you prove you have the money. usually you have to lock it up in some sort of escrow account. but if you have that much liquid money, you usually understand auto insurance is super cheap for the amount of legal protection it provides you to keep your own money safe lol
you also don’t need home insurance if you own your home outright. the mortgage company is worried you’ll leave them hanging if your collateral on a mortgage burns to the ground. it’s not a law or anything, it’s the bank protecting it’s asset
now as to whether going without those two are a smart idea? i’m sure you have an idea about what we’ll say lol
They can, but it’s definitely not a good idea.
On a commercial level many companies find it cheaper to self insure
So assuming $250,000 at 7.5% return you’d be making $18,750 per year. Safe to assume insurance would only be around 4-6k for the year. Why would you risk it when 1 accident would wipe out your self insurance nest egg?
Sure, get a policy with bare minimum state limits and self insure beyond that. Or some states allow you to self insure. That said, $200-300k is nothing for an insurance claim. It is possible, just incredibly stupid.
*could* you? Sure, in some states they’ll let you self-insure to auto with proof of wealth and a sizable deposit of sorts.
For home, you don’t have to insure it if you own it outright.
Both of these decisions are **wildly** stupid for almost everyone.
I know you don’t wanna get yelled at but I’m yelling at you as loud as I can to not do this. You will lose all $300k of your net worth if one bad thing happens. Not worth it.
Sure, they can. However, the wealthiest clients I’ve dealt with do the exact opposite. They will insure for the highest limits of liability we’ll give them but won’t pay for Comprehensive and Collision on their own vehicles. The thinking is they can easily replace their own vehicles if totaled but they don’t want to deal with the headache the liability part of a claim will be so they ask that we just deal with it ourselves were it to happen.
The point if insurance is to keep that 200k-300k safe. Insurance is useless if you are already broke
It would be stupid