Is Car Necessary?

RRatchet

Hi,

I am asking this question out of curiosity to see if my much loved deceased father was havering or not. He told me that you did not actually have to have conventional car insurance. You could if you were rich enough lodge a huge sum (£80,000 or £800,000 I think) with a body based in London. This body I assumed was Loyds Of London but it could have possibly been a Government Dept. I realise if this was true it would not apply to most of us and would also present problems if you were ever asked for your insurance details as I suspect no-one would believe you and explaining it would be difficult.

Thanks

RRatchet

maclean2

Hi - well your dear old Dad was right.Under The Road Traffic Act 1988 if you put up a bond for £500000 you can elect to pay your own claims.Large bodies like the Post Office and BT have the financial clout to do this.Overall it is likely to show them a saving as they can invest the money until the clai is actually paid rather than handing over premiums to an insurance company which benefits from investing them until the claims are paid out.

HTH

lisyloo

Trouble is that this is still risky.
If you have a large claim then it can cost more than this.
The one with the guy who drove onto the railway track was £30M.

If I had that much money I would still buy a 3rd party policy because I wouldn't want to take the risk.

I think "self insurance" is a good thing because by definition insurance is poor value as someone is making a profit, but there are always items you can't afford so you need to insure for.

maclean2

Hi - this avenue is not really open to anyone except a large organization or plc.They would still take our reinsurance against the really large claim it would be with an excess of £500000 per claim or possibly even more !

Fortis who insured the driver who insured the driver who caused the rail crash paid out the £40m (approx ) but were able to recover around £38m from their reinsurance company.But be careful when you hit a train as now most car policies have a limit of £20m for damage to third party property.There is no limit for claims paid out for injury or death as this is required by UK law.

HTH

Astaroth

As others have said, you can pay a bond to the courts but would still be liable for monies above this some.

Large companies do not tend to do this but go down the self insurer/ captured insurer route instead (more so the latter as there can be tax benefits for still "paying" your insurance even if it is funny money going into a company you also own). Depending on the size of the company they may then outsource their claims handling to an agency or handle the whole thing internally. Reinsurance is needed for it but then we start getting into a very complicated area

RRatchet

Dear All

Thankyou for all your replies; It would seemthat I have not completely lost the plot. Although I got the details wrong I got the gist right, from that font of all knowledge, both useful and not, my wonderfull deceased dad. What's worrying though is I seem to be turning into him; for which there appears to be no cure.

Thanks

RRatchet