Author Topic: Pondering Change To Auto Insurance Policy  (Read 1711 times)

CBnCO

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Pondering Change To Auto Insurance Policy
« on: September 28, 2019, 07:25:23 AM »
Looked through older threads and couldn't find an exact answer for my question:

Have two vehicles that are used and at a value where only liability (currently have 100/300/100) makes sense; however, we've been carrying uninsured/under-insured  BI coverage as well and it makes up a whopping 41% of current premium. Other posts and advice have suggested max-ing out the liability to match your at-risk assets and even looking at umbrella coverage, if necessary; but, very little about whether the uninsured coverage is a good deal.

I checked our health insurance and it doesn't seem to disqualify treatments from auto accidents. So, first question is whether the uninsured coverage is really necessary given it's cost. A quick analysis using Geico's online quoting tool shows I can up the liability to 300/300/100 (minimum required for umbrella) and add a $1M umbrella policy and still be less than current rate ($1.3M total coverage). Or, skip the umbrella and take the auto liability up to $1M and pay about 20-25% less each six months that present, if I cancel the uninsured BI coverage. 

I'm leaning toward making one of these changes; but, thought a quick post to see if I'm overlooking anything? Most advice online suggests buying max insurance for everything. At the core, I think mandatory insurance is a bit of a scam; but, so are tort laws and medical costs, and you can't ignore the reality of our broken system to your own detriment. Just trying to be smart and efficient with our money.

Thoughts? Thanks in advance!

seattlecyclone

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Re: Pondering Change To Auto Insurance Policy
« Reply #1 on: September 28, 2019, 09:49:46 AM »
We have liability-only coverage for our car, plus an umbrella.

I had the same logic as you regarding the underinsured coverage: it's great if the person who hits me has insurance or assets to reimburse whatever liability they owe, but if they don't I have health insurance and that's good enough.

Note that adding a $1 million umbrella to a $300k auto policy generally doesn't mean you have $1.3 million of total coverage. Umbrella policies are generally written to require you to have a certain level of liability insurance on your home and auto policies. The umbrella policy only starts paying after the auto policy is maxed out, and it will cover your liability up to a total of $1 million (or whatever) between the two insurance policies. Therefore if you do get umbrella insurance you should see what auto liability they require; there's no benefit to going any higher than that with your auto policy.

CBnCO

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Re: Pondering Change To Auto Insurance Policy
« Reply #2 on: September 28, 2019, 10:14:53 AM »

Note that adding a $1 million umbrella to a $300k auto policy generally doesn't mean you have $1.3 million of total coverage. Umbrella policies are generally written to require you to have a certain level of liability insurance on your home and auto policies. The umbrella policy only starts paying after the auto policy is maxed out, and it will cover your liability up to a total of $1 million (or whatever) between the two insurance policies. Therefore if you do get umbrella insurance you should see what auto liability they require; there's no benefit to going any higher than that with your auto policy.

Interesting...I'll have to look into that. This would mean if they require $300K on the auto liability and it's a $1M umbrella,it's really only $700K of additional liability coverage. Would still need to weigh this v. a standalone auto liability increase. That said, amazing to me that an insurance agent (or Geico's online tool) has never asked me about total at-risk assets when selling me auto insurance. Maybe because most people don't have over $300K at risk; but, seems quite negligent.

xjordix

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Re: Pondering Change To Auto Insurance Policy
« Reply #3 on: October 09, 2019, 11:14:50 AM »
Quote
So, first question is whether the uninsured coverage is really necessary given it's cost.

This is clearly dependent upon how many vehicles you own and your financial ability to replace an automobile if necessary.

Do you want to be in a situation where you have only one vehicle, you can't afford to immediately replace an automobile if necessary, then an uninsured motorist comes along and totals your vehicle?

Car Jack

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Re: Pondering Change To Auto Insurance Policy
« Reply #4 on: October 09, 2019, 11:48:27 AM »
Are you sure that the bodily injury category you're looking at is for you?

I have my policy broken down in front of me.  There are several sections that include bodily injury to others and that's where the big $$ are. 

Compulsory:
Bodily injury to others  $20k pp, $40k pa: $230
Bodily injury caused by uninsured: $100 pp, $300 pa: $7

Optional:
Bodily injury to others $500k pp, $500k pa (required by my umbrella): $438
Bodily injury cause by uninsured: $100k pp, $300k pa (required by my umbrella): $13

Compulsury
Personal Injury Protection (which I believe the OP is talking about): $8k pp (no pa limit) $59 



I don't carry collision on this car.  So in short, in order to meet umbrella requirements, you sort of need to pay these.  Also, my 19 year old son is considered primary on this car, so the rates reflect this.  Our Crosstrek costs 1/4 to 1/3 of this and does have collision.  So the risk raises the rate.  A lot.

seattlecyclone

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Re: Pondering Change To Auto Insurance Policy
« Reply #5 on: October 09, 2019, 02:14:39 PM »
Quote
So, first question is whether the uninsured coverage is really necessary given it's cost.

This is clearly dependent upon how many vehicles you own and your financial ability to replace an automobile if necessary.

Do you want to be in a situation where you have only one vehicle, you can't afford to immediately replace an automobile if necessary, then an uninsured motorist comes along and totals your vehicle?

The OP mentioned their cars were old enough to drop collision coverage. They're already accepting that they'll pay the full cost of the vehicle if they crash it into a tree or something. Do you really need to pay extra premiums to make sure that you're paid more when an uninsured motorist crashes into you than when you get into a crash due to your own mistake?

LiveLean

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Re: Pondering Change To Auto Insurance Policy
« Reply #6 on: October 09, 2019, 03:19:57 PM »
I've posted this in other forums. Let me be blunt:

MAX OUT YOUR UNINSURED MOTORIST COVERAGE


WHEN YOU'VE DONE THAT, MAX IT OUT ON YOUR LIABILITY/UMBRELLA POLICY

Millions and millions of people are allowed to drive without auto insurance or with minimal insurance. That means when - not if, when -- they hit you, you're responsible for life-changing injuries, including paralysis. The only way you get any money for your injuries and treatment is by having uninsured motorist coverage. You can't sue someone with nothing. Heck, you will need a lawyer just to get your own insurer to cough up what you're supposed to have. Lawyers work on contingency, taking one third. Thus, if you don't have uninsured motorist coverage, they're not going to rep you.

I speak from experience. Five years ago, a crazy careless woman with $20,000 of coverage hit me, nearly killed me. Forget the damn car -- people focus way too much on the freakin' car. This is about your life and your body. If I did not have $500K in uninsured motorist, my six figures in medical bills, including two surgeries and working with a dozen specialists, would not have been covered. (I'm still facing another surgery). Yes, I could have used my health insurance, but that's far more expensive and covers far fewer things than when you start dealing with the types of treatments not considered mainstream but necessary with auto accidents, anything from stem cells injections to chiropractic care to working with personal trainers.

Nor does health insurance compensate you for future care necessitated by the accident. After settling with my insurer, my lawyer taking his cut, and paying all of the people who treated me for nearly three years, I was left with a five-figure sum in reserve for my future surgery and anything else that likely will come up in the coming years.

My only regret is that I did not have uninsured motorist attached to my umbrella liability, which I sure as hell do now.

 Not having adequate uninsured motorist coverage could be the worst financial decision of your life.
« Last Edit: October 09, 2019, 03:31:56 PM by LiveLean »

Gronnie

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Re: Pondering Change To Auto Insurance Policy
« Reply #7 on: October 09, 2019, 04:50:40 PM »
There's no such thing as "maximum at risk assets". Just because you have, say, 500k in assets -- that doesn't mean you only need $500k coverage. If you get sued for $1 million and lose, they will get the $500k in coverage you have as well as your $500k in assets. If you get sued for 1.5 million and lose, they'll take everything and you still owe $500k.

seattlecyclone

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Re: Pondering Change To Auto Insurance Policy
« Reply #8 on: October 09, 2019, 05:26:09 PM »
@LiveLean, I'm sorry to hear about your car crash.

What would you have done if you had received these same injuries due to something that was nobody's fault but your own? Suppose instead of the underinsured motorist hitting you, you hit a patch of black ice and skidded into a light pole or something.

Not having anyone to blame but yourself and mother nature, the cost of treating your injuries would have needed to go through health insurance. Yes, you would have likely paid more out of pocket for medical care than you did with underinsured motorist insurance. You would have used your disability insurance (if you had any) to pay your bills during any time away from work, instead of having these expenses covered by your underinsured motorist coverage.

We buy insurance to protect us from financial ruin when something bad happens. Getting hit by an underinsured motorist can definitely cost a bundle of money without insurance, but what I don't like about this coverage is that it is so narrowly tailored to one particular situation. You're protected from that one thing, but why protect yourself more from that thing than from crashing your own car, getting in a skiing accident, or injuring yourself in any number of other possible ways?

By purchasing different levels of insurance for different ways of injuring yourself, one of two things must be true. Either
1) You have too much insurance for the things you're more protected against; you could accept less (or no) special coverage for those things and still not experience financial ruin when they happen, or
2) You have too little insurance for the things you're less protected against; getting injured in these ways would still result in financial ruin.

I'm not saying to skip all insurance. Everyone should have good health insurance, covering a full range of treatments for potential illnesses and injuries, with low enough out-of-pocket costs that you can actually afford to pay them when necessary. Everyone who still relies on their income from a job to support their lifestyle should have disability insurance to help pay their bills in case of any disabling injury or illness that keeps them away from work. Everyone who has any significant amount of assets should have strong liability insurance, likely an umbrella policy and any professional liability insurance that may apply to their work.

If you have all these broad-based policies that protect you from financial ruin without regard to the specific event that triggers it, why add extra insurance for just one way of getting hurt?

LiveLean

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Re: Pondering Change To Auto Insurance Policy
« Reply #9 on: October 10, 2019, 06:57:15 AM »
@seattlecyclone....Keep in mind uninsured motorist coverage, like auto insurance overall, also protects you from anything involving a car -- i.e. you're hit while walking, biking, running, Rollerblading, skateboarding, stepping off a curb, etc. It's not as narrow as you might think.

Don't look at it as just the injuries themselves. What about lost wages? Change of career necessitated by injuries? (I had to tweak mine.) That compensation will not come from health insurance. Of course, even with my $500K in uninsured motorist, I had little left after insurer negotiated that down with my lawyer, I paid 1/3 to the lawyer, and all of my medical bills. 

seattlecyclone

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Re: Pondering Change To Auto Insurance Policy
« Reply #10 on: October 10, 2019, 09:23:38 AM »
@seattlecyclone....Keep in mind uninsured motorist coverage, like auto insurance overall, also protects you from anything involving a car -- i.e. you're hit while walking, biking, running, Rollerblading, skateboarding, stepping off a curb, etc. It's not as narrow as you might think.

Sure, but an uninsured motorist still needs to be involved. What if you crash your own bike rather than being hit by someone else? Would that be a big problem for you? If so, you need to look at beefing up your other insurance. Once you've got enough insurance to cover yourself in accidents of your own making, you'll probably find that the extra insurance for accidents of someone else's making is superfluous. That's my whole point here.

Quote
Don't look at it as just the injuries themselves. What about lost wages? Change of career necessitated by injuries?

Disability insurance. Make sure to get a policy that pays out if you can't continue in your current career. There are cheaper policies that will only pay out if you're so disabled that you can't do any paid work.