Need Frugal Car Ins Ideas

[bythesea]

My daughter is getting ready to receive her learners permit.  I want to make frugal car insurance decisions when I add her to our policy.  I know I deserve a huge face punch for the insurance that we currently have.  I'm really not sure how to figure out what insurance coverage that we really need.

We have two vehicles that are both long paid for.  Mine is a 2001 Nissan and my husband has a 2005 Colorado.  Our daughter will be driving primarily the car.  Right now we have full coverage on both with a $250 deductible.  I know...really bad.  However, we have two friends that had accidents, did not have enough coverage, and they lost their homes and everything.  Due to that, we've been really hesitant to lower our coverage.  Both cars have low mileage, under 100k each, since we live just a few miles from work and we bike a lot instead.  Oh, and we do have the cash in savings to replace either.

Any suggestions are appreciated.  I just don't want to be clueless when I call to change our policy.

[r3dt4rget]

Drop the full coverage, switch to liability only. If there is a deductible, choose the highest one. Liability covers other people and property you are legally responsible for. Full coverage does that plus covers your property and yourself in the case the accident is your fault. There isn't a significant risk in dropping full coverage because it is a legal requirement that drivers maintain at least liability. Meaning, if you do not cause the accident, their insurance will pay your damages. So you really only lose out if you cause the accident and suffer damage to your property and/or person. Since you have low value older cars, there is no need to carry full coverage. Just don't cause accidents and you will be fine.

In general the higher coverage amounts for liability are cheap. Full coverage vs liability is the major price savings. Also, since you drive so little your risk is reduced significantly over the average person. So yes, a facepunch is deserved lol jk

Shop around online. Many people are under the impression the provider they have been with for 20 years has the best rate. I had insurance for 5+ years with a perfect driving record. I thought I was paying a low amount. I shopped around and found better coverage for half the cost.

[TerriM]

Keep in mind that "should have insurance" and "do have insurance" are two different things.  Furthermore, they can have insurance on their own car and be driving someone else's who might not care to hand over their insurance information when they find out that they're actually on the hook.

Does she have to drive right now?  Can you wait until she's older? 

Another option is to make her work to pay for her own insurance.  She won't take driving lightly then.

[bythesea]

Does she have to drive right now?  Can you wait until she's older? 

Another option is to make her work to pay for her own insurance.  She won't take driving lightly then.

Yes, I want her to learn to drive now.  She is a great kid that gets excellent grades in honors classes and she would be absolutely crushed if she couldn't.  She has been counting down the days for a year!  Plus, she worked all last summer house sitting pets for people so that she would have gas money.  In addition, she knows that she will be getting a summer job to help cover some of her driving and college costs.

[Gin1984]

If you could replace the cars I would get rid of comprehensive and collision but increase your liability to the max. 

[nawhite]

Knowing how often my friends and I crashed/dented/scraped/bumped etc our parents cars in the first 2 years of driving I'd go into this planning financially on whatever car she drives to be totaled at some point while she is on your insurance. I'm not saying that she will necessarily do it, but I'd go in with that plan. This leaves a couple options:

1. Keep the comprehensive/collision insurance on the car she drives. This will effectively amortize the cost of the repairs over time. You'll pay a fixed known amount every month, and maybe you'll get lucky and she wont have put a scratch on the car and you'll be out the money you paid for insurance (this is how insurance is supposed to work).

2. Ditch the comprehensive/collision coverage and have the money on hand to buy another car and mentally expect to spend that money in the next few years. This is not "emergency fund" money, this is "replace the car when daughter crashes it" money. They are very different pots. If she turns out to be a great driver and lucky, you keep the money and big win for you. If she crashes once, you lose the money but that is ok b/c you expected it. If she crashes twice (not unheard of for 16 year old drivers) you lose significantly more money.

You could probably save some money by buying a super cheap POS car for like $1200 that runs but is ugly and just gift it to her. Then present the pros and cons of comprehensive/collision insurance to her (like above) and give her the option of paying for the additional comprehensive coverage. I can almost guarantee that she won't pay for it (b/c it is expensive) and then when she crashes the car, it is her decision to pay to fix it, scrap it, replace it etc. And you still keep the "Good Parent Points" b/c not only do you let her drive, you bought her a car! (She just happened to crash it).

[more4less]

I wonder what's the business model of Freeway insurance which I hear on radio (hip-hop radio for that matter ;). They advertise ridiculously low premiums - where's the catch?

[nawhite]

I wonder what's the business model of Freeway insurance which I hear on radio (hip-hop radio for that matter ;). They advertise ridiculously low premiums - where's the catch?

Most of the time insurance companies like that provide "state-minimum coverage" which depending on your state can be liability insurance as low as like $12,500. Personally I carry $1.3 million (300k in auto and 1mil in umbrella). My insurance costs much more than insurance from those companies, but if I fall asleep at the wheel and crash into someone's house or heaven forbid drift into oncoming traffic and have a head-on collision which kills someone, I'm much less likely to need to declare bankruptcy afterward.

[LadyStache]

1. You said she's a great student. Awesome. Many insurance companies offer a "good student" discount. You just need to submit her last report card.
2. Take a defensive driving class. All of you (including you and your husband). In most states insurance companies are required to offer you a discount for doing so, you just need to send them a copy of a certificate that you completed the course. Check the rules in your state. I was able to take a course online for super cheap (with a promo code I found online). It was really easy and more than paid for itself within the first 6 months.
3. Increase your deductible. $250 is pretty low, I think $500 is standard. For the vehicle your daughter isn't driving, you should definitely consider a $1000 deductible since you have enough in savings to cover that amount anyway.
4. Shop around. Be sure to get the rates for AAA. In my case, AAA was about half of what most other insurance companies in my area were charging. They also offer renter's and homeowner's insurance if you want to bundle.