Product Update

State Self-Insurance Qualifications for Auto Liability Updated in Risk Financing

This release of Risk Financing features updates to the summaries of the state self-insurance qualifications for automobile liability.

All 50 states plus the District of Columbia permit self-insurance for automobile liability. All 50 states also have their own statutes and regulations governing the issue. The summaries provide an outline of each state's regulations, including the following.

  • State agency contact information
  • Governing statutes with Web addresses if available
  • Requirements for the minimum number of vehicles
  • Filing instructions and fees
  • Net worth and security requirements
  • Requirements for excess insurance
  • Special provisions, including those for autonomous vehicles

Automobile liability self-insurance offers a number of benefits, such as reduced premiums, more control over claims, and an opportunity for significant overall costs savings. However, the regulations vary widely between states. Complying with all of the various regulations and requirements can be a daunting task, especially for insureds with multistate operations. For example, some states allow self-insurance for applicants with only one vehicle, while others will only permit it for insureds with a fleet of 26 or more. Some states have enacted specific legislation with regard to requirements for an applicant's net worth, while others leave financial capability decisions up to the discretion of the agency charged with making sure vehicle owners can meet financial responsibility requirements.

For this reason, insureds often utilize other arrangements such as large deductibles or fronting programs. Both allow insureds opportunities for cost savings but without the additional administrative burden of complying with self-insurance requirements. Detailed discussions on self-insurance, fronting arrangements, and large deductible plans are described in "Workers Compensation Nonsubscription Programs." Comparisons of various types of plans are presented in "Plan Evaluation."