this post was submitted on 10 Dec 2025
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The difference is that (in theory at least), insurance will pay your full costs, regardless of how much you've already paid in. You can sign an auto insurance on one day, pay in 100$, then get into a 20k$ crash the next, and get the entire costs covered.
A retirement savings fund is capped by how much money you've put in it. You can never take out more money than you've put in (+interest/portfolio growth).
That's kinda the whole point of insurance. If you want an insurance model like described in the post, well nothing is stopping you from opening an ETF or other savings fund, and dedicating it to auto payments. It's not like you need a dedicated industry/service for that.
You still have to pay for insurance even with the fund though. It's required by law.
The requirement is "proof of financial responsibility" not "insurance" specifically. Every state allows you to establish a surety bond rather than insurance. If you've got $30k-$50k lying around doing nothing, you can let the state hold on to. So long as you don't get sued for damages related to your driving, you get it back when you stop driving.