Author Topic: Help with auto insurance deductible  (Read 3340 times)

ghaynes

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Help with auto insurance deductible
« on: January 10, 2013, 08:44:40 AM »
Curious what other mustachians have as their auto insurance deductible. My wife and I our looking for ways to lower our auto insurance since we currently pay ($870 every 6 months) and it looks like changing our deductible would be the best option. Right now we have a low deductible of just $250. If we changed to a $500 deductible our new rate would be ($780 every 6 months) and if we bump it up to $1000 it would be ($660 every 6 months).

Breakdown:
Moving to $500 deductible would save us $15 per month
Moving to $1000 deductible would save us $35 per month

Our cars are a 2007 Hyundai Sonata and a 2004 GMC Envoy XUV. Our last accident report was 6 years ago. I'm leaning towards going to the $1000 deductible since have the cash in case of an accident. We have about $25k in an emergency fund. What do you think we should do?

trammatic

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Re: Help with auto insurance deductible
« Reply #1 on: January 10, 2013, 09:14:55 AM »
If I were in your shoes, I'd drop it altogether.

Of the options you presented, switching to the 1000 deductible would have a payoff in 20 months, and since you don't get into accidents more often than that, you should be okay.  Especailly for collision coverage.

For Other Than Collision or Comprehensive, that covers things that happen to your car outside of your control (fire, thieft, vandalism, animal strikes, etc.)  How likely are these things to happen?  I had Comp on my cars when I lived in Washington, DC, but dropped it when I moved to a MD suburb.  Or, how many dead deer do you see on the side of the road?

Figure out how much money you're spending on each car's replacement insurance.  Divide that into the cost of the car to get a forecast of how reasonable it is.  The newer the car, the more likely you're overpaying altogether.  Also, realize that if your Envoy is worth 3k, a 1k deductible means that you'll only get 2/3 the replacement cost of the car when all is said and done.  (To show numbers estimating keep the insurance, I had a 93 Buick worth about 1750 and little future depreciation, annual full coverage with a 100 deductible was $43, which gives a 38 year payoff...in other words, if I totaled the car within 38 years, I'd get more money with the insurance than without.  But this was with an 18-year-old car...) 

chucklesmcgee

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Re: Help with auto insurance deductible
« Reply #2 on: January 10, 2013, 10:35:41 AM »
Drop collision insurance entirely. This is the coverage if someone else damages your car. Worst case without collision insurance, you'd have to get a replacement car and you can easily afford it. So why are you paying for protection that is expected to cost more in premiums than you get out in claims?

jrhampt

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Re: Help with auto insurance deductible
« Reply #3 on: January 10, 2013, 12:29:32 PM »
I agree with the recommendation to drop collision on cars over 5 years old.