The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Frankies Girl on May 10, 2018, 04:22:22 PM
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Got my latest 6 month statement and they're raising the rates again. Shopped around and they still are at least $150 cheaper than anywhere else, and so now looking hard at coverage and whether or not this & that is a good idea.
Also need opinions on whether we're being dumb for not having uninsured motorist coverage? Or should have higher coverage anywhere?
Details:
14 year old tiny car (TA). Good overall shape, our daily errands/running around car due to the insanely good gas mileage. Plan on keeping til it dies (and it is a Toyota so it may be a while).
5 year old small SUV, used for any major road trips, occasional running around, travel and hauling things. Yes, we need two vehicles. Not going to get rid of either, and plan on keeping both till they die.
Both drivers have excellent driving records. No tickets, violations, accidents or claims in like ever. We wear seatbelts, don't speed or drive aggressively and obey all traffic laws to the best of our ability. Driving is also much reduced as well since we both are FIRE and the only driving is usually daytime, on well known routes, and things like going to the store or recreational.
General coverage
100K/300K for Bodily injury liability
50K property damage liability
Rejected PIP, medical uninsured motorist, medical payments
TA coverage
KBB: $2,500
Comprehensive coverage, set to maximum deductible allowed. Covers theft/fire/flood/vandalism/falling objects... (~$16/year)
No Uninsured motorist property damage
Currently see no point in this as the car would likely be totaled if hit, am I missing something?
No Collision (same thing as above - car is considered worthless really so why cover this?)
Emergency Road Service. It's ~$14/year, but does require us to have at least comprehensive on it. Not giving this up. Used it way too many times.
SUV coverage
KBB: $12,500
Comprehensive coverage, set to maximum deductible allowed. Covers theft/fire/flood/vandalism/falling objects... (~$13/year)
No Uninsured motorist property damage (should we have?)
No Collision? Currently carrying, debating dropping due to the age of the vehicle.
Mechanical Breakdown - this is 99.9% on the chopping block. It is a basic extended warranty, that works for 10 years/100K, and covers anything mechanical after the $250 deductible. A/C goes out in year 8? $250 and it's fixed. Transmission dies 9 years, 11 months and 99K? Same thing. Attractive, but realize that I don't even have 22K on the vehicle at 5 years, and it's not driven daily and babied so the likelihood of anything needing this is slim to none, and cancelling it NOW will save me around $500 over the next 5 years. So fighting the sunk cost fallacy of what I've already paid in, and the worry of "what if the engine blows up next year? Boy will I feel dumb for cancelling this!" thinking. But once it's canceled, it is gone and no going back. Sigh.
Emergency Road Service. It's ~$14/year, but does require us to have at least comprehensive on it. Not giving this up. Used it way too many times.
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Your liability insurance doesn't look excessive to me (if anything you might want more property damage coverage). I agree that cutting $100/yr mechanical breakdown coverage is probably the right idea. Other than that you're essentially spending $57/yr for a roadside assistance policy (with a bit of usable comprehensive coverage for the SUV) - many VISA cards offer roadside assistance at $69.95/incident - if you have this on one of your cards and use roadside assistance less than once a year that could be a better deal.
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Your liability insurance doesn't look excessive to me (if anything you might want more property damage coverage). I agree that cutting $100/yr mechanical breakdown coverage is probably the right idea. Other than that you're essentially spending $57/yr for a roadside assistance policy (with a bit of usable comprehensive coverage for the SUV) - many VISA cards offer roadside assistance at $69.95/incident - if you have this on one of your cards and use roadside assistance less than once a year that could be a better deal.
The roadside assistance is actually $28 for both vehicles a year, so it's still a way better deal than any coverage out there offered through AAA, Visa or what.
I've gone back and forth on the property damage coverage, and my thinking on the level is that is for fender-bender/skidded into someone's yard due to accident type situation and have to resod or replace a length of fence or landscaping. I don't tailgate and am hyper aware about who is in my general area when driving (and if it's a shiny fancy $$$ vehicle, I stay many car lengths away from it out of habit), and both myself and husband have proactively taken defensive driving. If we did cause an accident that required payout on property damage, it's also going to be pretty low speed incident (we rarely are even on a highway/go above 50mph any time) so the chances of causing over 50K of damage is quite small. So I'm gambling a bit, but I think it's a very good bet.
The mechanical breakdown - yeah. Made sense when I was driving cross country several times a year, work commutes were 20-40 miles one way or driving to conferences around the state and sitting in stop and go traffic every weekday. I didn't rethink it once I FIREd, so that is definitely gonna get axed.
If I drop the mechanical breakdown and the comprehensive on the SUV, and change nothing else, I shave $160/year off my premiums. Pretty strong argument.
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Yes, you're being dumb. Get under-insured motorist and PIP coverage now. :) I am paying $22/year for $300K in UIM for 2 drivers.
Don't assume that because you're a good driver, you won't get in an accident. We all have bad days.
You own paid off vehicles. Personally, I don't carry collision. But on a 12K vehicle and for $13/year, I would pay for it. That's not much money.
Med pay is typically expensive. Have some but not much. If you have your own health insurance, you can likely get by without much.
100/300 is not a ton of coverage. I don't know what your asset picture is, but for most folks on the road to FIRE, it's not enough. If you own residence in a HCOL area, I would absolutely get an umbrella policy too. Stepping up to 250/500K or 300/500 coverage and an umbrella that kicks in after that is not exorbitant. Like maybe 200-300/year more than what you pay.
If you were in an accident and anyone requires surgery it's relatively easy to run up more than 100K in medicals and economic damages. You should assume that the other side will run an asset/credit check on you and make an educated guess about whether you have any assets to go after. Your insurance company would likely make a policy limits settlement and then you'd be on your own.
Also, and the big reason I carry insurance: it's possible to really injure another person when driving. If I did that, I would want them to get enough money to cover their losses. And for some losses, enough money is a lot of money.
/end rant
Get UIM insurance.
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Your liability insurance doesn't look excessive to me (if anything you might want more property damage coverage). I agree that cutting $100/yr mechanical breakdown coverage is probably the right idea. Other than that you're essentially spending $57/yr for a roadside assistance policy (with a bit of usable comprehensive coverage for the SUV) - many VISA cards offer roadside assistance at $69.95/incident - if you have this on one of your cards and use roadside assistance less than once a year that could be a better deal.
The roadside assistance is actually $28 for both vehicles a year, so it's still a way better deal than any coverage out there offered through AAA, Visa or what.
I was adding in the cost of the comprehensive because you mentioned that you require the comprehensive to be able to get the roadside on your policy. If you could keep the roadside for $28 and drop the comprehensive, I'd recommend doing that. Certainly comprehensive with maximum deductible (I'm guessing $1000) is worth hardly anything on a vehicle worth only about $2500. The VISA coverage is pay per use rather than pay per year, so if you only use it rarely it is a better deal. I agree that $57/yr for coverage of 2 cars is pretty hard to beat if a pay per usage plan doesn't work for you.
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Ask about discounts too. I just saved about $50 per 6 month renewal for 2 years by taking an online defensive driving course.