Self-Insuring Auto Coverage
Nash went 34 years without comprehensive or collision coverage — and paid the premiums to his policies instead.
From Building Your Warehouse of Wealth, Chapter 8
Most people carry comprehensive and collision coverage because they can't absorb a major loss. Nash proposed a different approach for people with well-established IBC systems: drop the coverage entirely and pay that premium to your own policy instead.
The logic is straightforward. Insurance companies are profitable — they collect more in premiums than they pay in claims. By self-insuring, you're becoming your own insurance company. You keep the "premium" in your policy system. If an incident occurs, you finance the repair or replacement through a policy loan.
Nash practiced what he preached. He personally went 34 years without carrying comprehensive or collision coverage on his vehicles. The premiums he would have paid to an auto insurer instead went into his whole life policies, where they earned dividends and compounded for decades.
This approach isn't for everyone and isn't appropriate until your cash values are well established. You need enough accessible capital to absorb a total loss without straining your system. But once you reach that point, self-insuring is another way to keep both the banking function and the insurance premium flow under your own control.
The principle extends beyond auto insurance. Any risk you can self-insure — high deductibles on homeowner's insurance, self-funding smaller medical expenses — redirects premium dollars from insurance companies into your own compounding system.