Automobile Insurance

You asked whether California, Connecticut and Texas allow owners of private passenger motor vehicles to self-insure, by posting a bond, against their potential liability for personal injury or death.

All three states allow owners to self-insure their potential risk of liability from operating a private passenger motor vehicle.

Motor vehicle owners in California must deposit $35,000 in a qualified state financial institution in lieu of purchasing liability insurance to satisfy the state's mandatory financial responsibility requirement. The deposit must be audited and assigned to the Department of Motor Vehicles (Cal. Vehicle Code § 16054.2).

In Connecticut, subject to the Insurance Commissioner's approval, owners must file an application along with evidence that reliable financial arrangements, deposits or commitments exist that provide assurance that the obligations imposed by the mandatory security law can be met (CGS § 38a-371(c) 1 and 3). The owner may deposit with the Insurance Department cash or securities as financial security. A minimum of $50,000 in cash or its equivalent in securities (those that can be purchased by saving banks or for trust funds) must be deposited if there is only one private motor vehicle. If two vehicles, $60,000, three, $65,000, and four, $70,000 or equivalent securities.

Owners may instead post a bond of a surety company authorized to do business in the state or use another means of security to assure payment. The bond or other security must pay an amount equivalent to that afforded by a policy. The Insurance Commissioner must approve the substitute security.

In addition to the cash, bond or security requirement, self-insurers must also provide evidence that they can promptly and efficiently pay claims, benefits, and other obligations. To satisfy these requirement self-insurers must either (1) have a written contract with a licensed attorney or independent adjusting firm or (2) establish a claims department with at least one licensed claims adjuster.

Owners in Texas must make application, agree to act as an insurance company for purposes of claims and deposit securities (usually a certificate of deposit) or cash in the amount of $55,000 with the state comptroller to self-insure. The Department of Public Safety issues a certificate in lieu of a policy that is good for one year.

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