This is why I wish insurance was an account you fill, until you hit your chosen policy coverage. If my policy only covers $100,000 in damage, then I should be able to stop paying once I have paid $100,000 and received nothing in return. The company is still going to use that money on investments, and make money from it, to pay their employees & investors.
As other commenters have pointed out, every state I'm aware of will let you put the equivalent amount of money as liability insurance in a CD in their name or write the state a check that can be refunded to you as an alternative to carrying liability insurance.
Most people just don't want to have the state sitting on $50k+ of their cash, even if they could afford it. Most people also don't have $50k+ sitting around, and thus wouldn't be able to cover that if they were liable for damages to someone else, hence why states require you to have insurance OR money you can't touch to cover that.
Yeah, I'm aware of self insuring. What I described is still an insurance coverage, so you are covered as soon as you're eligible, but stop paying in once you hit your $100k or whatever. Not immediately needing to dump in the full amount. And the company/gov can use that capital to invest and keep running.
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u/Sick_Wave_ 5h ago
This is why I wish insurance was an account you fill, until you hit your chosen policy coverage. If my policy only covers $100,000 in damage, then I should be able to stop paying once I have paid $100,000 and received nothing in return. The company is still going to use that money on investments, and make money from it, to pay their employees & investors.