Can I Self-Insure My Car? What is Self-Insured Car Insurance?

Last Updated on December 18, 2025

“Self-insuring” a car sounds unusual, but it’s a real (and legal) way to satisfy your state’s financial responsibility rules in certain situations—most often for businesses with large fleets. For the average driver, though, true self-insurance is usually impractical and risky.

Below, we’ll break down what self-insured car insurance actually means, who can qualify, how the process works, and the safer “partial self-insurance” options most drivers use instead.

Key Takeaways

• “Self-insured car insurance” usually means state-approved self-insurance for liability—most commonly available to fleets, not everyday single-car drivers.
• Many states require a large vehicle count (often 25+), financial statements, and security like a cash deposit, surety bond, or letter of credit to qualify.
• True self-insurance generally doesn’t pay for damage to your own car—so a major crash or total loss can mean big out-of-pocket costs.
• Most drivers are better off with “partial self-insurance” strategies like dropping comp/collision on low-value cars or raising deductibles while keeping required liability coverage.

What is Self-Insured Car Insurance?

Self-insured car insurance isn’t a traditional type of auto insurance policy. It’s typically a state-approved way to prove you can pay for damages you cause in a crash without buying a standard policy from an insurer.

Instead of paying premiums to a company like GEICO, you (or your business) agree to cover losses with your own money—usually backed by a cash deposit, surety bond, letter of credit, and/or a state-issued certificate of self-insurance.

Important: In many states, self-insurance is mainly designed for fleet owners (often 25+ vehicles). And even when you qualify, self-insurance generally covers liability (damage/injuries you cause to others)—not repairs to your own car.

Surprise! You Might Already Be “Self-Insured” in One Way

Most people are self-insured against something—anytime a risk isn’t covered by a policy. For example, if you don’t carry renter’s or homeowner’s insurance, you’re effectively paying out of pocket if your belongings are damaged or stolen.

With self-insuring a car, you’re taking that idea to the road: you accept the financial responsibility for covered losses instead of transferring it to an insurance company.

How Self-Insured Auto Insurance Works

There are a few ways “self-insurance” gets used in real life. Which route makes sense depends on your assets, your risk tolerance, and whether you’re trying to cut costs by applying smart auto insurance strategy (rather than simply dropping coverage).

Option 1: Get a Certificate of Self-Insurance (Usually for Fleets)

This is “true” self-insurance. In many states, you can only qualify if you have a large number of vehicles registered in your name (often 25+). For example, Colorado and Texas both reference 25+ vehicles for self-insurance eligibility under their rules—meaning it’s typically aimed at businesses and fleet owners, not a single family car.

If your state allows it, the process generally looks like this:

• Confirm eligibility (vehicle count, business status, financial requirements, claims history, etc.).
• Apply with the state (DMV and/or department of insurance, depending on where your state handles self-insurance).
• Provide financial backing (cash deposit, surety bond, letter of credit, or other security).
• Receive documentation (often a certificate of self-insurance) and keep it available as proof.
• Maintain ongoing requirements (some states require renewals, updated financial statements, or minimum net worth).

How much money is required varies widely. Some states require tens of thousands of dollars, while others may require substantially more depending on your fleet size and the state’s rules. Practically speaking, this is why true self-insured car insurance usually isn’t feasible for most drivers.

If you’re trying to find your state’s official motor vehicle site quickly, this DMV-maintained directory is a solid starting point: your state’s Department of Motor Vehicles (DMV).

Even with a certificate, you’re still responsible for paying claims. That means a serious crash can create huge out-of-pocket exposure—especially if damages exceed whatever security you posted.

States typically recognize a few common forms of proof/financial backing for self-insurance:

Surety Bond: In some states, you can post a surety bond purchased through a licensed surety company. It’s essentially a guarantee that you have the means to cover your liability if you cause a crash.

Deposit Funds: Some states let you deposit cash (or an approved equivalent) with the state as security. If you cause a crash, that money can be used to pay claims.

Certificate of Self-Insurance: Once approved, the state may issue a certificate that functions like standard proof of insurance documentation for legal purposes. You’ll typically need to keep it accessible (and provide it if you’re pulled over or after a crash).

Self-Insurance by State

Self-insurance rules change, and eligibility can depend on details like vehicle count, business structure, and financial statements. The table below summarizes states that allow some form of self-insurance and the typical bond/deposit approach used in lieu of a traditional policy—always verify the latest requirements with your state before making decisions.

Option 2: “Partial” Self-Insured Car Insurance (What Most People Really Mean)

When most drivers ask about self-insuring, they’re usually talking about a safer version: keep the coverage you must have, and self-fund the rest.

A common approach is to buy basic liability insurance while skipping optional coverage you may not need. Instead of opting for full coverage, you drop (or never add) the parts that pay for damage to your own car: comprehensive and collision.

Then you take the money you would’ve spent on those optional coverages and build your own “car repair fund” in a separate savings account. In effect, the insurer handles your liability exposure while you handle your own vehicle risk.

This can work well when:

• Your car is older and not worth much relative to the premium for comp/collision.
• You have enough cash savings to repair/replace the car if something happens.
• You’re not financing or leasing the vehicle (lenders usually require comp/collision).

It can be a bad idea when you couldn’t easily replace the car after a major loss (or when you’re still paying a lender who requires full coverage). If you’re unsure, compare rates from a few companies first—pricing can vary dramatically across the insurance company market.

Option 3: Get Partially Self-Insured by Raising Your Deductible

Another practical form of partial self-insurance is raising your deductible. Higher deductibles usually mean lower premiums—but you take on more upfront cost if you file a claim.

Put simply: you’re “self-insuring” the amount up to your deductible. This strategy can be smart if you have emergency savings and you file claims rarely.

FAQs on Self-Insured Car Insurance

Final Word on Self Car Insurance

True self-insured car insurance is real—but it’s usually designed for fleets and requires strong financial backing, strict eligibility rules, and state approval. Most everyday drivers are better served by “partial self-insurance” strategies like dropping optional coverages on low-value vehicles or increasing deductibles, while keeping the liability protection the law requires.

And remember: driving without valid proof of coverage (or an approved self-insurance certificate) can lead to serious penalties. If you’re weighing options, make sure you can still meet your state’s legal requirements—and know the potential cost of a ticket for no proof of insurance.