Can you be your own Car Insurance in Canada?

Question

I have been talking with a few friends, and we all feel the current state of Car Insurance is ridiculous. Why should I pay $100-$200 every month for something that I only need so I can legally drive my vehicle? I can't remember the last accident I've been in that I've needed insurance, and most people when they get into accidents they don't tell their insurance company because they don't want their rate to increase. This logic makes no sense.

We came up with an idea that makes the most sense, why can't Car Insurance work like a loan? You pay a membership fee, of like $10-$20/month (this is only to cover any legal expenses I'm sure there are when it comes to owning a business/company), and you, the consumer, go on with your business, if you don't get into an accident then you don't need to worry about.

Then, if you get into an accident and need, say, $700. You come to us, your insurance company, and we work out a loan payment, we give you $700, and your monthly fee increases to say $100/month until you have paid back what we lent you, after which your monthly payment returns to it's natural $10-$20 dollar/month fee.

Of course you get into a potential problem where customers take your money and run, insurance fraud, etc. But let's assume that we do credit/background checks, and we're very selective...

How viable is this? Can you start up your own company like "Intact"? Everywhere I've read says that Insurance Companies sell through Carriers, but can you be your own carrier?

Answer 1

>Then, if you get into an accident and need, say, $700



And what if they need $1,500,000 dollars? Any idea how much it costs if you run over three children crossing the road? Reconstructive surgery and a life time in a wheelchair... is a heck of a lot more than $700. Are you going to loan someone $1.5M knowing full well they can't pay you back?



In many provinces you have to purchase insurance through provincial insurance companies. In those which allow private insurance... you have to your company audited and bonded and insurance policies must meet specific requirements -- typically $1M in liability. Companies must have a board of directors, assets, CFO, a minimum number of policies, minimum group sizes, etc. They inspect each and verify credentials, etc. Asset reserves must be in the tens of millions per policy group, or a percentage of the number in the group. The minimum liability insurance all provinces in Canada is $1M. Many Canadians have $2M or $4M liability policies on their vehicles.



Even if you offered insurance for $80 a month, I wouldn't possibly buy it from you because I know full well that no company charging $80 a month isn't a scam. Nor do I have any interest in getting a loan if someone steals my car. Most people already need a loan to buy the car in the first place.

Answer 2

Because the companies wouldn't make nearly enough money that way. Insurance companies can charge whatever rate they want.



And you need to be licensed to be your own carrier. If I get in an accident and I have to have insurance they can't just go off me saying "oh I am my insurance".



Your idea sounds decent in theory but in reality it would never happen.

Answer 3

Canada has 'self-insurance' laws the require a cash bond of CD100,000. To register as an assurance company, your cash bond will require at least 3 more zeros on the end depending on the number of customers you intend to cover.