But of the people I know, $20k isn't even a tenth of their yearly "fun car money", and compared to the reoccurring cost of insurance coverage that is a sunk cost even if you are never in an accident, this method can be much much cheaper for them in the long run.
If you're making enough that you can spend $200K just on fun car stuff, then yes, it's quite likely you can self-insure and not worry about that. The vast majority of people that like to tinker with their cars aren't in that income bracket, though. As regards the $20K bond - good luck if that's all you have to pay for in a serious accident. That quite possibly won't even cover the cost of the other car if it's totalled, much less medical expenses for another party that's seriously injured.