How to lower my insurance costs?

[reader2580]

My insurance costs are, and have been, through the roof.  No traffic tickets, ever.  I had a crash, but long enough ago to be off my insurance record.  $1000 deductible on everything.  I had been paying $3,200 a year for full coverage one vehicle, full coverage motorhome, homeowners, and $1 million umbrella liability.  I recently was able to slice off about $400 a year by shifting carriers.  The drop was mostly due to insuring motorhome for liability only when I am actually driving it.

I feel like I pay way too much in insurance, but I've checked with other agents and I can't find anything really lower.  Do any of you have suggestions for lowering my insurance bill?  Yes, I could be driving a cheaper car with no collision/comp, but I am not going there right now.   I noticed MMM only pays $400 a year for homeowners, but no idea what his deductible is.  My homeowners insurance is about $1800 a year and keeps going up due to crazy weather in recent years.

[lbmustache]

1) Where do you live?

2) Why do you have an umbrella liability policy? This may be what is driving up your costs...

Is your car insurance covering medical? If you have health insurance you don't need that and can save $.

MMM also lives in a small town in Colorado where nothing happens (low crime, no crazy weather, etc.) so that is probably why his homeowners insurance is low. I also think he has relatively high deductibles because if you are saving correctly, you can afford the bills if something bad happens.

[reader2580]

Umbrella is because I participate in a somewhat dangerous hobby that could potentially cause serious injury or death to a spectator or other persons.  It costs around $200 a year for $1 million coverage.  I also have a motorhome that if it was involved in a crash could easily cause $1 million in damages if another party was injured or killed.  I don't think I can drop the medical portion of my auto insurance, but I can check.

At least 60% of my insurance cost is for homeowners.  My insurance renewal is coming up so I can check on how increasing the deductible would change things.  As someone who isn't FI right now, one or two $5,000 hits for damage to the house would be devastating.  Yes, you can get hit by hail twice in one year (friend replaced roof twice in one year.) although that is far from likely.  I could replace my own roof for way less than a pro, but I am far from retiring so the time would be an issue.

[regulator]

At least 60% of my insurance cost is for homeowners.  My insurance renewal is coming up so I can check on how increasing the deductible would change things.  As someone who isn't FI right now, one or two $5,000 hits for damage to the house would be devastating.  Yes, you can get hit by hail twice in one year (friend replaced roof twice in one year.) although that is far from likely.  I could replace my own roof for way less than a pro, but I am far from retiring so the time would be an issue.

Where are you geographically?  Some local homeowners' markets are a mess and there really is no way to do anything about it.

[StacheInAFlash]

Umbrella is because I participate in a somewhat dangerous hobby that could potentially cause serious injury or death to a spectator or other persons.  It costs around $200 a year for $1 million coverage.

Have you verified that the umbrella policy actually would cover this scenario? A lot of umbrella policies still won't cover crazy thing that takes place while doing "dangerous" things like skydiving, race car driving, bites by dogs already deemed dangerous, etc. I'm a huge fan of umbrella policies, and your rate isn't too crazy (although I pay $117 a year for $1 million), but please double check your coverage if you haven't asked specifically asked your agent (who also confirms with the underwriter) about your dangerous activity.

Otherwise, cheaper insurance is about having cheaper vehicles and homes in safe, LCOL locations while being combined with higher deductibles. You're unwilling to act on the cheaper vehicle or home (which is fine), you may not be able to change your location, so you're really left with higher deductibles. They don't need to be crazy high, but if you're at a crazy low $500 or $1000 deductible, you can definitely bump that up to at least $2500. 

[reader2580]

I am in the Minneapolis, MN area.  Weather incidents have been more often and more damaging so homeowners has been going up.

I do high power rocketry as a hobby.  There is always the chance that the rocket comes down in a way that hurts or kills someone or causes major damage.  I have just assumed I would be covered.  The umbrella liability policy does require that my auto policy have the highest available limits on liability.

[regulator]

I am in the Minneapolis, MN area.  Weather incidents have been more often and more damaging so homeowners has been going up.

I do high power rocketry as a hobby.  There is always the chance that the rocket comes down in a way that hurts or kills someone or causes major damage.  I have just assumed I would be covered.  The umbrella liability policy does require that my auto policy have the highest available limits on liability.

I would definitely check with your umbrella carrier.  If you are not covered there, see if there is a hobbyist organization that offers coverage.

[reader2580]

You pretty much have to belong to a national organization to be in the hobby.  They have $1 million liability insurance, but that really isn't much if you kill/disable someone.  A lot of people in the hobby have umbrella liability policies.

I like having the umbrella liability insurance in general.  $1 million isn't much these days if you are found liable for killing or maiming someone.  If I had a stash I wouldn't want it taken away, or be forced to pay a substantial portion of my income to a settlement for the rest of my life.  Umbrella liability is probably not mustachian I know.  I would rather find $200 in savings in my auto insurance or homeowners.  Lots of other things I would give up for $200 a year rather than umbrella liability.

A friend of mine was being held liable for burning down an apartment building by accident.  The landlord's insurance company paid for the rebuild, but the insurance company wanted to come after my friend.  He had no insurance and and basically had nothing anyhow.  He told them that he had nothing and that he would just file bankruptcy if they tried to sue him and won.  The insurance company backed off, but I would like insurance if that happened to me.

[Spork]

I recently went through this drill.

I basically called and/or went through web sites of about 10 major insurance companies for house, auto & umbrella.

I know this stuff varies a lot by state... but I ended up paying around $2400 for 3 cars, house and a bigger umbrella policy.  I ended up going with AAA.  Their auto was about half the cost of my previous carrier (with much higher coverage limits.)

My one difference: I ONLY carry liability on my autos.  None of my cars are fancy.  None are terribly new.  And my general rule of thumb is: if you can't pay cash for the car, wreck it and pay cash for another just like it -- then you cannot afford that car.

[AZDude]

I'll ask the dumb question. If you are nowhere close to FI and in a place where $5K would be a major catastrophe, why the hell do you have an expensive car and a motorhome? Insurance might be the least of your worries.

[GetItRight]

For auto insurance...

Ditch the collision coverage on your car. It's only to cover you for when you strike another vehicle and are at fault. Drive appropriately. If anyone hits you you will seek reimbursement from the at fault person's insurance, just without your insurance acting as a middle man. More work but usually not a big deal (I've done this several times).

Comprehensive coverage depends on your perceived risk (theft, vandalism, tree falling on it, etc.) vs the value of your vehicles.

Go higher on deductible if possible and it actually saves an appreciable amount. I consider insurance to cover me from total loss type scenarios, not many other scenarios that would cause me to make a claim on my own insurance policy.

Ensure you have sufficient uninsured/underinsured property damage to replace your car if an uninsured or hit and run totals your car. Set liability at what you're comfortable with for uninsured/underinsured. If you ride a motorcycle I recommend the maximum offered on your bike policy as you will be injured if you are hit. It may be minor (a few grand) or it may be debilitating (sky is the limit), but if you need a helicoptor ride that'll be more than minimum liability limit most people have and good luck collecting any significant amounts after a judgement.

Don't be particularly loyal to any insurance company. Most will try to shaft you if you have significant damages or injuries. Assume for any major event you'll need to hire a lawyer who will take 1/3 of the policy limits and any judgements beyond that.

Comprehensive collision coverage is a bad deal for anything other than a rare, specialty, classic, or collector vehicle. If you have comprehensive/collision get an agreed value policy or you'll be screwed. Insure for agreed value sufficient to cover all costs you have into the vehicle including compensating you for all your time you have put into it.

[Spork]

Comprehensive collision coverage is a bad deal for anything other than a rare, specialty, classic, or collector vehicle. If you have comprehensive/collision get an agreed value policy or you'll be screwed. Insure for agreed value sufficient to cover all costs you have into the vehicle including compensating you for all your time you have put into it.

It can also be a really bad deal for a rare classic vehicle.  Those can be particularly difficult to get a reasonable cost estimate on.  If you think "replacement value" means "enough to replace it" ... you'll likely be in for a surprise.  If you're wanting actual replacement cost on a classic, you'll probably need to get insurance for a specific amount that you deem to be replacement cost. (I got really screwed on this many years ago.)

[regulator]

You pretty much have to belong to a national organization to be in the hobby.  They have $1 million liability insurance, but that really isn't much if you kill/disable someone.  A lot of people in the hobby have umbrella liability policies.

I like having the umbrella liability insurance in general.  $1 million isn't much these days if you are found liable for killing or maiming someone.  If I had a stash I wouldn't want it taken away, or be forced to pay a substantial portion of my income to a settlement for the rest of my life.  Umbrella liability is probably not mustachian I know.  I would rather find $200 in savings in my auto insurance or homeowners.  Lots of other things I would give up for $200 a year rather than umbrella liability.

A friend of mine was being held liable for burning down an apartment building by accident.  The landlord's insurance company paid for the rebuild, but the insurance company wanted to come after my friend.  He had no insurance and and basically had nothing anyhow.  He told them that he had nothing and that he would just file bankruptcy if they tried to sue him and won.  The insurance company backed off, but I would like insurance if that happened to me.

Understood.  I very much value an umbrella policy and carry a $2MM limit.  Like I said, make sure your umbrella coverage would actually cover you for rocketry activity.

So assuming you are not budging on the car or RV and related coverage, what is left is homeowners.  I think all you can really do there is shop it like crazy and see if there is any savings out there.  You could also raise deductibles, but the times I have looked into that 90% of the savings happen by the time I get to a $1000 deductible.

[reader2580]

I have a loan on my car so I have to have collision and comp.  I'm working to get that car loan paid off as soon as I can.  I am also considering options such as buying a different used car.  My car issue is I don't want to buy someone else's problem.  I need my car to start every day and not be in the shop all the time.  While I am very much a DIY type I am not a car mechanic.  I can do the basics, but I haven't learned to do brakes or other work like that.

My goals for my financial life are to be debt free other than mortgage in 18 months and be able to put more away for retirement than the 10% I do now.  I'm never going to be like MMM and live within biking distance of everything and eliminate most all spending in my life to save money.  I am a car clown, but I am reducing my driving.  I will probably start taking the bus in December to cut down on driving, but I live miles from the nearest bus stop so I would drive there for now.  Yes, I own a motorhome, but it is old and basically worth about nothing.  I will not register or insure it and just let it sit for a bit.  I would sell my house and move into my motorhome before getting rid of the motorhome.  (It would cost a ton to heat my motorhome for the winter.)

If I can't save on insurance it is just something I'll have to deal with.  I have no issue with changing carriers and I did at my last renewal to save a little bit.  I just feel like I spend far too much on insurance compared to what I know others pay.  I think I'll drop all insurance on the motorhome to save a little bit for a while.

I know not everyone on this forum is like Mr. MM.  Some are still car clowns, and some, gasp, still have cable TV.

[Spork]

Sure, not everyone is like MMM.  I'm not.  I take the suggestions that work for me.  No worries with that.

And I'm firmly attached to cars as well.  I live in the boonies.  I have 3 cars for 2 drivers.  (I had 4 until recently).  All my cars were bought used and have been really reasonable/reliable cars.  (Okay... one isn't reasonable/reliable, but I've had it for 33 years and haven't had the balls to snip the emotional chains on that one.)  My point is: a 5-10 year old Toyota (for example) is a pretty reliable car and can be had for a fairly reasonable price.