Car insurance, was researching Ohio's laws today and found this mildly interesting:

[The Straight Story]

In Ohio you have a few basic options for car insurance:

1. Buy it through an insurance company, the premiums are paid out and kept by the company
2. Buy a 30k state bond (federal bonds don't count) which you can cash in if you move to another state or later choose #1
3. A certificate of bond issued by the BMV, after proper application and approval, in the amount of $30,000 signed by two (2) individuals who own real estate having equity of at least $60,000;

(there are a few others).

So the way I understand it (and I called the BMV to verify) is that the avg person loses the money they pay out monthly/yearly even if they never have an accident, but if you can afford a 30k Bond and don't have an accident you can get your money back (the interest on the bond is paid back into the state general fund).

So - If you pay $60/month for 5 years you are out $3600. You buy a bond and cash it out in 5 years you paid nothing.

Am I missing anything here, is it the same in your state?

If you can afford it and buy one bond your insurance (unless you cause an accident) is basically free at some point.


http://www.insurance.ohio.gov/newsroom/tips/pages/minimumcoverage.aspx

[HopeHoops]

1. That's an excellent question. PA requires proof of insurance, but I don't know if bonds count.

:shrug:

[pnwmom]

2. You're missing the part about liability. You could lose your house and all your savings

if you were at fault and caused someone's serious injury or death.

But if you didn't have any assets aren't worried about having to declare bankruptcy, then I guess you'd be okay. Providing you didn't care that -- if you were at fault -- you wouldn't have any way to compensate the person you had injured.

[The Straight Story]

5. Well, here is the point about that:

If you rarely drive your chances of an accident go way down. You can maintain the minimum coverage, essentially free over time, whereas someone without those funds it will cost them money.

Many people buy minimum coverage anyway, and the insurance company will only cover up to so much (with a deductible) so you can end up on the hook regardless (when you get min. coverage it's not a blank check, it only covers up to a certain amount - same as a bond).

[sinkingfeeling]

3. $30,000 seems like it's way too little to cover a mjor accident. You could have the

cost of 2 cars to pay for and hundreds of thousands in medical expenses. And what if somebody died? Now if the bond was for $1 million or so, I might consider it.

[The Straight Story]

6. Min Coverage here: $12,500, plus:

The law requires financial responsibility in the minimum amount of $12,500 for bodily injury to or death of one (1) individual in any one (1) accident, $25,000 for bodily injury to or death of two (2) or more individuals in any one (1) accident, and $7,500 for injury to the property of others in any one (1) accident.

http://bmv.ohio.gov/fr_laws.stm

[sinkingfeeling]

7. And you could stand to lose your house and anything else you own, if sued for medical

bills higher than that. I carry an extra policy just for liability.

[The Straight Story]

8. How much will insurance companies cover?? How much can people afford today?

With poor credit you pay more. Min coverage runs me about $68/month - it runs my X and her husband more (it covers them both) and they are on SSDI and make less than 13k/year. They can't get extra coverage, many folks cannot.

I am NOT saying it is the best way to go (buying a bond for Min. coverage) but I do find it interesting that those that can afford it, in effect, pay nothing over time for their insurance.

[PoliticAverse]

4. Many states allow something identical or similar. n/t

[Ruby the Liberal]

9. If we had national health insurance, I might consider it.

The medical bills from even a minor accident could rack up into the hundreds of thousands.

[madinmaryland]

10. The more likely scenario is someone taking out a $1,000,000 cash bond

which I would assume be put in an interest bearing escrow account. Since that is what a typical policy covers for two cars, you would even at an APR of 1% would be making $10,000/yr vs. paying the insurance company $3,000/yr.

[On the Road]

11. The Implications of Catastrophic Medical Costs

are scary. If you're considering this as a possibility, it might be worth finding out if there is cheap catastrophic insurance available that would cover the portion that's not covered by the bond.

It is an appealing idea if you have a good driving record, but there's certainly a risk factor.

[The Straight Story]

12. No way I could even consider it

It is just interesting to me that if you had the cash and wanted min. coverage you could, essentially, get it for free.

It covers the same amount of money. Difference being if you can put that much up now instead of later you don't have a monthly payment and can recoup your costs for the insurance in full at a later date.

Something most people cannot do.

[Travis_0004]

13. I'm just suprised you didn't know about this.

I would assume that you can self insure every state if you have the cash. Most large companies are self insured as well.

Also, you keep saying its free money, but its not free, there is some significant risk.

To give you an example, I am a low risk driver, and pay 400 a year for full coverage insurance. It will take me 75 years before I pay 30,000 in insurance (I know this assumes rates stay flat, which they won't). Now, I've gone 12 years so far without any claims on my insurance, (although I have made claims on other peoples insurance when they hit me), but statistically, I will not go 75 years without a claim.

You make it sound like this is a windfall for rich people, I don't think it is. The only way I would recommend somebody does this if they have so much money that even loosing 30,000 grand is insignificant, but if they have assets like that, then they should have a very large auto insurance policy to protect their assets anyway, or even if they went with state minimum, I'm sure they wouldn't care about the 1,500 a year policy (I'm going to assume they are not insuring a Honda civic).

I don't think its a big deal, and I could care less if somebody choose this route over traditional insurance.