Insurace for Car, Home and Rental Property

[KMB]

Mustachians, my insurance costs have exploded! Insurance for my rental has gone from $350 to almost $700 in 3 years. Despite recently becoming a father, passing 30 years of age and driving an older vehicle (but not that old: '07) my car insurance is refusing to decline. I've only been in my current residence for 2 years now, but my insurance costs have already started rising fast. Additionally, my rental is not held in an LLC, so I am in the market for an umbrella policy.

I've tried some geico and progressive for auto, but it seems that combining home and auto is the best bet for savings. Where do you all get your insurance coverage? What can I do to get a good deal?

Also, is there value in having a personal relationship with your agent? Some of my current policies are with my aunt. Typically she's great, but she doesn't seem to be very interested in helping me reduce my bill. I'm ready to try someone else/the internet, but I've never made a claim with anyone else, is there a big difference in dealing with different agents?

[Enphuego]

Insurance is on average, a losing bet.  If you can afford to deal with the fallout from the disaster you are insuring against, you don't need insurance and you shouldn't pay for it.  Analyze each expenditure for insurance and ask yourself if it's necessary.

Your rental:  If your rental property burned to the ground, you'd still have the land.  Depending on where it's located, that could be worth half or more of the value of the property.  The worst case scenario is a natural disaster that destroyed the rental and reduced the value of the land.  I'd guess that you could still sell the property for about 1/3 of the value.  If you could continue on without that income, I wouldn't insure it.

Car insurance: I certainly hope you aren't paying for full coverage on that car.  If you've got enough money in the bank to replace your car, you won't be needing car insurance beyond the minimums.

[Daley]

Car insurance: I certainly hope you aren't paying for full coverage on that car.  If you've got enough money in the bank to replace your car, you won't be needing car insurance beyond the minimums.

I agree with everything said but that quoted line, and here's why. Don't go with minimums where it counts most on a policy where the insurance is there not just for yourself, but for the people impacted by your actions. Unless you've got the liquid assets and balls of steel to take full responsibility, properly compensate a widow and orphan(s), and afford a lawyer who can get you out of potential manslaughter charges without breaking a sweat... be frugal, but don't be cheap.

[Enphuego]

I should clarify.  I don't think he should cheap out and pick an insurance company that's unlikely to pay out in case of a claim.  The reality of car insurance is that in some way you are really paying the retainer on a lawyer - when the insurance company has $500K of liability on the line, they send the good lawyer.  When they've got $15K of liability on the line, they send the new guy.

Of course, there are other ways to limit your exposure to these problems.  The easiest is to drive defensively and carefully.  You could also simply drive less.  You could find a good lawyer ahead of time and keep enough liquid assets on hand to hire a lawyer immediately if you are involved in a accident.  You could also keep you personal assets that are subject to civil penalties to a minimum.  If you've got a net worth of approximately zero, it's really not worth insuring nothing.  If you've got little money to be taken and a good lawyer, it's a strong deterrent to a lawsuit.  Most of these things are free or very low cost so long as everything goes well.

Also keep in mind that the OP is 30.  If he gets into an accident and they take everything, it's not going to be as much of a disaster as it would be if he were 50 and retired.  It's a calculated risk and the odds are greatly in his favor.  Humans are notoriously poor at calculating risk for severe, unlikely events.  We tend to overestimate both their likelihood and severity.

[Daley]

Enphuego, I'm not talking about risk assessment, financial exposure and legal representation to try and get you off the hook here, and it's clear that you didn't read my linked post. What I'm talking about is being a man and ensuring that any inflicted suffering you cause is actually covered for the person who's life and/or property you ruined. It's called being a responsible adult. If you have the stones to go out into the world and move around two tons of metal under your own control at any speed over 15MPH (no matter how careful you are), have the decency to take enough financial responsibility to ensure any failure on your part doesn't further complicate and ruin the lives of the people you've impacted. $15k of coverage doesn't cover SHIT.

[arebelspy]

I.P.:  No one once, in that thread or this one, said one shouldn't pay what they are responsible for.   We get your point, and no one has disagreed.

[Daley]

I.P.:  No one once, in that thread or this one, said one shouldn't pay what they are responsible for.   We get your point, and no one has disagreed.

My apologies for being a bit forceful there, it was far more hostile than it should have been.

I firmly believe that car insurance is not a policy that should ever be approached with an "only the minimums" and the "lowest payout possible" to save money, and it bugs the crap out of me when I see people advocating the cheapest car policy possible based on likelihood of usage and numbers games only factoring themselves and their personal property in the equation. Mustachianism is just as much about being socially responsible as it is being financially independent. Advocating minimum coverage means advocating minimum coverage across the board, including state minimum payouts to other parties for bodily injury and property damage. This is not insurance for you that you're paying for, it is insurance for other people whose lives have crossed paths with your own in tragic and unexpected ways. If God forbid it's needed, make sure those lives can be cared for reasonably without them necessarily having to resort to suing you for compensation.

I won't say any more on the subject.

[arebelspy]

I don't necessarily agree that one can't have the minimums.  If one can self-insure, that's fine.  If one needs more coverage so they insurance company covers them, that's fine.

We agree (and I don't think anyone disagrees) that one ought to pay their debts, whether incurred on purpose or through an accident they caused.

[zweipersona]

I.P.:  No one once, in that thread or this one, said one shouldn't pay what they are responsible for.   We get your point, and no one has disagreed.

I won't say any more on the subject.

I don't think anyone can blame you for being passionate about the subject.  The problem is, insurance companies have a whole lot of statistics and data on drivers of various backgrounds, but do their best not to have this sort of information leak to the general public.

I've driven for over 8 years.  All of my family (parents, grandparents) have driven significantly more than I have.  None of us have even 1 accident than can be claimed as ours (Though there WAS this incident I drove into a ditch because of an iced dirt road but I digress...)

What you CAN save on, that saves you the most, is collision/comp.  It only affects YOUR vehicle, when damage is done to it outside of your control.  Hit and runs, parked damage, theft, trees, etc.  I drive a cheap 2001 tiburon.  Collision/comp would have cost me another 50/month.  And you should pay this assuming you will one day take advantage of this... which means paying a deductible, and paying higher insurance premiums after the insurance company increases your premium because you've filed a claim.

In short, if you do what many here do (ie, drive a very cheap vehicle), it isn't worth the collision/comp portion of insurance.

How much might be needed for Injury protection is another matter.  I wouldn't advocate the minimum either, but I would venture to guess most middle class are grossly over-insured.  (Which would make sense, given that's what the insurance agents would want to sell you)

[Bakari]

The important distinction is between full coverage and liability.

I'm sure most everyone participating in this discussion are aware of it, but it hasn't been that clear in the debate over "minimum" insurance.

So, just to clarify:  There are two completely separate and independent types of auto insurance

1) Liability.  This is what you are legally required to have.  The coverage minimum would be the lowest liability policy your state allows.  This is what I.P. is saying to make sure you have enough of.  Liability pays the other driver when you are at fault in an accident.
You can typically get anywhere from 15k to 500k of liability coverage.

2) Comprehensive/collision, also known as "full coverage".  This is designed to pay you for damage to your own car, regardless of who's fault the accident was.
This is insurance which NOBODY should EVER pay for (at least not a Mustachian).  As has been well established on this site, it is possible to get a good quality used car for a few thousand dollars.  A full coverage policy will often cost a thousand a year, and so, unless you expect to total your car every few years you are wasting money by paying for it.


Personally (although I don't have the minimum liability either) I believe that the most important way you can be a responsible adult about driving is to NEVER drive above the posted speed limit (and usually drive below it), leave l a r g e following distances (like 3-4 times what is considered normal) and never use a cellphone (not even with a handsfree device).  Basically, drive as if you are handling a lethal weapon (because you are)
There are no "accidents".  There is only negligence.

In answer to the OP question, I have Progressive.  I found them to be equally cheap as the lowest price out-of-state discount insurance a broker could find me, but incomparably more responsive when I needed to make claims (for theft from my shed and damage to my RV, which is also insured with them, in a policy that combines auto and home, since my RV is both)