Author Topic: Help me pick car insurance coverage?  (Read 1805 times)

HydroJim

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Help me pick car insurance coverage?
« on: January 11, 2017, 10:43:31 PM »
I recently upgraded my car from a 93 Geo Metro to a 2014 Mitsubishi mirage. Consequently, I've been thinking about what kind of insurance coverage I should have.

With the Geo I was paying $300/6 months for state minimum which was just $25k/$50k body and $25k property liability coverage.

Since my net worth is starting to increase (around $33k), I'm thinking I need to increase my liability coverage to protect my assets. From my understanding, if I cause $50k of damage to a person, and I only have $25k coverage, they will come after to me for the other $25k?

Also, I'm considering getting collision insurance for my new ride, at least until I'm out of college. I have the $6k in cash to replace the car if I smack it into a wall, but I'd rather not have to fork it all over because that would kill my emergency and my replenishing rate can be slow during the school year. Once I graduate and go to work full time, I'll probably drop collision since replacing the car wouldn't be a huge issue.

What would be the mustachian approach to my situation? Being so young kills my rates. I want to be well covered so my life isn't ruined by an accident or someone else's stupidity. At the same time, I don't want to pay $2000 a year for coverage on my $6k car.

iowagirl

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Re: Help me pick car insurance coverage?
« Reply #1 on: January 12, 2017, 05:02:18 AM »
If you increase your coverage higher than state minimum would that cover your assets enough for an at fault accident? Typically its not that much more. I would never recommend state minimum to anyone. Comp and Collision insurance can get really expensive so I would probably steer clear of it unless the car is worth more. That being said as you increase your net worth you may want to consider an umbrella policy to cover it. Not knowing your complete situation and insurance laws in your state its tough to really pin down the best scenario for you. Find a reputable agent in your area and discuss it with them.

Mgmny

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Re: Help me pick car insurance coverage?
« Reply #2 on: January 12, 2017, 08:09:51 AM »
I recently upgraded my car from a 93 Geo Metro to a 2014 Mitsubishi mirage. Consequently, I've been thinking about what kind of insurance coverage I should have.

With the Geo I was paying $300/6 months for state minimum which was just $25k/$50k body and $25k property liability coverage.

Since my net worth is starting to increase (around $33k), I'm thinking I need to increase my liability coverage to protect my assets. From my understanding, if I cause $50k of damage to a person, and I only have $25k coverage, they will come after to me for the other $25k?

Also, I'm considering getting collision insurance for my new ride, at least until I'm out of college. I have the $6k in cash to replace the car if I smack it into a wall, but I'd rather not have to fork it all over because that would kill my emergency and my replenishing rate can be slow during the school year. Once I graduate and go to work full time, I'll probably drop collision since replacing the car wouldn't be a huge issue.

What would be the mustachian approach to my situation? Being so young kills my rates. I want to be well covered so my life isn't ruined by an accident or someone else's stupidity. At the same time, I don't want to pay $2000 a year for coverage on my $6k car.

I can't comment on specific rates, but if you were paying $600 a year for a '93 Geo Metro, you are going to get DESTROYED with a 2014 Mitsubishi.

My best advice is to SHOP SHOP SHOP with car insurance quote. Generating quotes online at the different agencies takes like 5 minutes a piece, and will save you hundreds of dollar - WELL worth it. I got a different car in June, and just told my agent to update my covereage. I shopped around a few weeks later and found identical coverage for less than half the cost. Needless to say, i switched.

Shop, shop, shop. Especially because you are young, different companies will treat you differently.

chucklesmcgee

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Re: Help me pick car insurance coverage?
« Reply #3 on: January 12, 2017, 07:41:50 PM »

Also, I'm considering getting collision insurance for my new ride, at least until I'm out of college. I have the $6k in cash to replace the car if I smack it into a wall, but I'd rather not have to fork it all over because that would kill my emergency and my replenishing rate can be slow during the school year. Once I graduate and go to work full time, I'll probably drop collision since replacing the car wouldn't be a huge issue.


I'd just skip the collision coverage entirely. You wouldn't need $6k if you car were totaled, right? You could just get a cheaper car. Odds are you'll pay more in insurance coverage than you'd take out and you could stomach the loss.


You can increase your personal and property liability coverage if you'd like. Someone certainly could come after you for the other $25k if you cause $50k of damage under a $25k policy, but odds are they'd probably decide to settle at your limits, as an attorney would take a third of their settlement anyway and there's the added time, expense and possibility they lose. Insurance is priced like a casino- house always wins, but sometimes it's alright if you couldn't afford the consequences.

CDP45

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Re: Help me pick car insurance coverage?
« Reply #4 on: January 12, 2017, 10:44:27 PM »
If your networth is all in protected accounts (401K or if your state protects them, IRAs) then it is less worrisome, IMO, to carry the state minimums.

However, once you have significant assets that aren't in protected accounts (investment properties, second homes, taxable accounts, Roth IRAs, big emergency fund, home purchase downpayment savings accounts, etc) then you should definitely increase your liability protection.  In this case, you should also make sure you have decent home owners (or renters) insurance coverage for liability as well.

Like the OP said, he's young and doesn't have a lot of assets, and he would be so lucky as to settle for his entire net worth if he sent someone to the hospital. Also it's hard to contribute to retirement when your entire paycheck is being garnished for 25 years to pay off a $1,000,000 medical bill.

Here's what happens to any of you that have minimum limits: The insured company writes a check for $25k or whatever, and says wow thank goodness that moron only bought the minimum limits, we're off the hook!

And how good of a lawyer can you afford without insurance just on your own? Especially when you're up against a law firm that could easily make $300,000+ contingency off a slam dunk case against you.

You know what's a scam? UNDER-insurance - trying to save $50 or $100/yr while participating in an activity that causes BILLIONS in damages every year (driving).

You know why insurance is more expensive for males under 25 years old? Because they cause 10x the accidents as everyone else. But hey, it's your life.

https://www.trustedchoice.com/umbrella-insurance/coverage-faq/#-6288951

When choosing your coverage limits, consider three things:

    The risks you may face. Consider risks as a homeowner or renter, the risk of causing an accident during your work commute, and any potentially dangerous activities you participate in that could put those around you at risk.
    The value of your assets. These include properties, possessions, stocks, bonds, savings and retirement funds. The more assets you have to protect, the higher the umbrella policy limit you should consider.
    The potential loss of future income. Because liability lawsuits can result in loss of both current assets and future income, even those with few assets to protect may want to consider the long-term ramifications of a serious claim.

When you review your future income, consider your earning potential. You not have many assets now, but if youíre on track for a high paying career, you could be involved in a lawsuit that can target money you havenít earned yet.

Speak with an independent insurance agent to determine your specific risk factors and learn more about how to protect your current and future assets.



lbmustache

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Re: Help me pick car insurance coverage?
« Reply #5 on: January 12, 2017, 11:10:44 PM »
Chiming in to agree with CDP45. Everyone assesses risk differently, but I would not be comfortable with the bare minimum. You are on the hook for expenses that exceed your coverage and they can seize your assets or garnish wages.

SimpleCycle

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Re: Help me pick car insurance coverage?
« Reply #6 on: January 13, 2017, 09:38:42 AM »
Chiming in to agree with CDP45. Everyone assesses risk differently, but I would not be comfortable with the bare minimum. You are on the hook for expenses that exceed your coverage and they can seize your assets or garnish wages.

*may* be able to seize your assets or garnish wages depending on the circumstances as there are protections for your 401K/403b, even against personal injury lawsuits
If you were not negligent (DUI/DWI, vehicular manslaughter), and IF they get a judgement against you it may be possible to get the judgement discharged in bankruptcy which again does not affect your 401k/403b accounts.  Depending on your state of residence you may also have protections for your home and IRAs in the case of lawsuits and bankruptcy.

You can be found negligent for much less than DUI/DWI or vehicular manslaughter.  But the point is the OP doesn't have many assets as a college student, so insurance would protect his future earnings and future ability to accumulate assets.  You are right that it could be dischargeable in a bankruptcy in some cases, but people assess risk differently, and it's not a risk I would take.  For my own vehicle, the difference between $25k/$50k coverage and $300k/$300k coverage is $70/year.