answersLogoWhite
Insurance
Auto Insurance

Is there a co-op auto insurance where the only time premiums are charged is when the company has claims to pay out?


Top Answer
User Avatar
Wiki User
2004-12-27 13:54:50
2004-12-27 13:54:50

If there were, it is certain they would have more business than they could handle. Obviously the answer is no> There is a way to do this, but you would have to talk to an attorney and essentially start your own small insurance co-op that generally is still regulated by the state. It may even cost you more in the end, due to the legal paperwork and fees involved. But yes, if you really wanted to, you could put a large sum of money in an account for what is called a "reserve" of just in case money. Then when each member of the co-op has a claim, they pay higher amounts until they replace all the money that they have taken out. Be careful with this type of insurance, because if you pick the wrong people to allow in the co-op and they have a large claim, but can't afford higher premiums, the other members of the co-op must pay the difference if they wish the co-op to remain in business. In short...Talk to an attorney.

Related Questions

User Avatar

You pay premiums because insurance companies are a business and they are there to make a profit. Also, the premiums you pay go into a pool of money so the insurance company can pay out claims when necessary.

User Avatar

Loss Ratio in insurance is the ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. If an insurance company, for example, pays out $60 in claims for every $100 in collected premiums, then its loss ratio is 60%.

User Avatar

In order to know the answer to this, you would need to contact a custumer service representative at your insurance company.

User Avatar

When you get insurance on a car, a house, a boat, you pay the insurance company money, known as premiums. The insurance company invests that money. When there is a claim, some of the premium, along with some of the interest from the invested money, is used to pay the claim.

User Avatar

A well run life insurance company makes money in two ways: from underwriting profits, which is the excess of premiums paid in minus losses paid and by investment income, which is the money earned on premiums that have been invested before they are used to pay claims.


Copyright © 2020 Multiply Media, LLC. All Rights Reserved. The material on this site can not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of Multiply.