Difference between revisions of "Self Insurance"

From Conservapedia
Jump to: navigation, search
m (bolding title, sp, undeadend)
(top: Spelling/Grammar Check, typos fixed: self insurance → self-insurance (2))
 
Line 1: Line 1:
'''Self Insurance''' describes a decision, normally by a [[corporation]], not to insure a particular [[risk]].  Put another way, self insurance means no insurance.
+
'''Self Insurance''' describes a decision, normally by a [[corporation]], not to insure a particular [[risk]].  Put another way, self-insurance means no insurance.
  
 
For example, a company may make a decision not to insure for collision damage for company owned vehicles.  In such a situation an analysis was probably done that paying for individual collision damage as it occurs is less expensive than buying an insurance policy to cover it.
 
For example, a company may make a decision not to insure for collision damage for company owned vehicles.  In such a situation an analysis was probably done that paying for individual collision damage as it occurs is less expensive than buying an insurance policy to cover it.
  
For example, a company may determine that its annual collision damage on company owned vehicles is $120,000 but the insurance to cover this risk costs $130,000.  The decision is then made to self insure.  Normally, a company would accrue $10,000 per month for self insurance for collision damage.  In the US, such an accrual would not be deductible for tax purposes, although the actual damages paid for would be.
+
For example, a company may determine that its annual collision damage on company owned vehicles is $120,000 but the insurance to cover this risk costs $130,000.  The decision is then made to self insure.  Normally, a company would accrue $10,000 per month for self-insurance for collision damage.  In the US, such an accrual would not be deductible for tax purposes, although the actual damages paid for would be.
  
 
Companies may also self-insure their health insurance plans for employees.  Usually, they will use a Third Party Administrator or TPA to administer the claim administration for such a plan.  The company will also purchase a "stop loss" whereby an insurance policy will cover claims above a certain amount for either an individual's claims or total claims for the company.
 
Companies may also self-insure their health insurance plans for employees.  Usually, they will use a Third Party Administrator or TPA to administer the claim administration for such a plan.  The company will also purchase a "stop loss" whereby an insurance policy will cover claims above a certain amount for either an individual's claims or total claims for the company.

Latest revision as of 08:53, 22 August 2016

Self Insurance describes a decision, normally by a corporation, not to insure a particular risk. Put another way, self-insurance means no insurance.

For example, a company may make a decision not to insure for collision damage for company owned vehicles. In such a situation an analysis was probably done that paying for individual collision damage as it occurs is less expensive than buying an insurance policy to cover it.

For example, a company may determine that its annual collision damage on company owned vehicles is $120,000 but the insurance to cover this risk costs $130,000. The decision is then made to self insure. Normally, a company would accrue $10,000 per month for self-insurance for collision damage. In the US, such an accrual would not be deductible for tax purposes, although the actual damages paid for would be.

Companies may also self-insure their health insurance plans for employees. Usually, they will use a Third Party Administrator or TPA to administer the claim administration for such a plan. The company will also purchase a "stop loss" whereby an insurance policy will cover claims above a certain amount for either an individual's claims or total claims for the company.