Author Topic: Liability Only car insurance  (Read 12060 times)

Sailor Sam

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Liability Only car insurance
« on: May 11, 2015, 08:02:28 PM »
How many out there carry liability only for their car insurance?

Backstory:

I recently moved from Virginia to Washington state. Like a responsible adult, I called up my friendly USAA insurance underwriter to update my car insurance. His name was Clark, and he was very sad to tell me my WA premium would be $300 more expensive than my VA insurance. The increase was due to some fangled thing called Personal Injury Protection. Doesn't exist in VA, but in WA it's mandatory and protects me and my passenger in the case of an accident. After a lot of back and forth I ended up dropping collision insurance, which kept the premium at the same level as VA.

But, Clark was really distressed. He genuinely seemed scared for me, wandering around insurance-less. So distressed that I'm doubting the wisdom of my choice. My dad is aghast, my wife says it's my choice, and now I'm confused. What say ye, MMM community: have I made a wise decision, or am I being pound foolish?

The car is a 2010 Mini Cooper, if that sways your decision. Bought spankin' new for 28k, now worth ~23k according to Kelly Blue Book. I've never been in an accident, but past performance may not predict future results. Opinions?

TN_Steve

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Re: Liability Only car insurance
« Reply #1 on: May 11, 2015, 08:10:46 PM »
That's all we've carried for many years.  Can you afford to buy a new-to-you car in case of accident?  If so, it is the way to go.

Hank Sinatra

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Re: Liability Only car insurance
« Reply #2 on: May 11, 2015, 08:21:47 PM »
TN_Steve is right.  I have had liability-only  forever. I  kept the full Monty insurance  for a couple years when the cars were new just to protect against bad karma. If something totaled  my car tomorrow I can buy a New-for-Me car and not upset my safe withdrawal math. 

aceyou

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Re: Liability Only car insurance
« Reply #3 on: May 11, 2015, 08:27:29 PM »
Liability only here.  It's why I love driving a 1999 Camry.  If totaled it's $1,900 to replace it.  Drop in the bucket.

Syonyk

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Re: Liability Only car insurance
« Reply #4 on: May 11, 2015, 09:44:01 PM »
I have full coverage on our car & truck (which are a bit newer - yes, not popular, yes, planning to run them forever, yes, I use the truck as a truck and only as a truck...), but ran liability only on my cars for years.  I only have liability on the motorcycles, since none of them are worth very much (though I should check that... one might still have full coverage).

My threshold is, "Can I afford to do without the vehicle or replace it without major financial impact to me?"  If yes, I don't keep comprehensive on it.

Sid Hoffman

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Re: Liability Only car insurance
« Reply #5 on: May 11, 2015, 11:48:00 PM »
That's all we've carried for many years.  Can you afford to buy a new-to-you car in case of accident?  If so, it is the way to go.

I've never seen health insurance that covers auto accidents.  If you have liability only auto insurance, doesn't that mean if you get in a single-car wreck, such as sliding off the road and rolling over into a tree on a rainy night, that you are 100% responsible for your own medical expenses?  Or if an uninsured or underinsured driver hits you?  That happens all the time in AZ, where I think we lead the nation in uninsured drivers.

Sailor Sam

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Re: Liability Only car insurance
« Reply #6 on: May 12, 2015, 08:00:16 AM »
Thanks for chiming in everyone.

TM_Steve: Yup, I can buy a new car if push comes to emergency. It wouldn't be fun, but I can cover it. I can cover repairing this car, if I find I really want to.

Sid, good question about the health insurance. The real answer is that I'm not sure. I believe that's why WA makes the Personal Injury Protection mandatory. I'm covered for 100k of medical expenses. Kind of redundant for me personally though since I have Tricare Prime. They cover everything.


TheThirstyStag

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Re: Liability Only car insurance
« Reply #7 on: May 12, 2015, 09:56:56 AM »
I struggled with the same questions in a similar situation to yours a few years ago.  Here's what I did.  I received two quotes - with and without collision.  I went without comprehensive and collision, but I still put the monthly difference in premium into an earmarked "self-insurance" ing direct account.  In a few years I will have enough in it to cover most of what I would normally claim in an at-fault situation (less deductible) or a situation that comprehensive coverage would normally kick in.  If I am incident free, then I come out ahead of course.

I don't have a vehicle worth more than $5000, though, so your situation is slightly different.  I still like the strategy of carrying catastrophe insurance only, then putting away the difference in premium into a self-insurance pool. 

celticmyst08

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Re: Liability Only car insurance
« Reply #8 on: May 12, 2015, 10:16:55 AM »
I do. I have a 2004 Chevy Classic with 180k miles on it. It has a salvage title; my parents owned it previously, and hit a deer which totaled the car. Most of that damage was cosmetic so the car still runs great, and has had no major issues, but it's pretty much worth nothing.

beltim

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Re: Liability Only car insurance
« Reply #9 on: May 12, 2015, 10:43:29 AM »
That's all we've carried for many years.  Can you afford to buy a new-to-you car in case of accident?  If so, it is the way to go.

I've never seen health insurance that covers auto accidents.  If you have liability only auto insurance, doesn't that mean if you get in a single-car wreck, such as sliding off the road and rolling over into a tree on a rainy night, that you are 100% responsible for your own medical expenses?  Or if an uninsured or underinsured driver hits you?  That happens all the time in AZ, where I think we lead the nation in uninsured drivers.

You've actually seen health insurance claims denied because injuries were from auto accidents?  That would be illegal in most states, including Arizona. 

http://www.phillipslaw.com/arizona-accident-faqs
http://www.rmiia.org/auto/steering_through_your_auto_policy/How_medical_bills_are_paid.asp

Spork

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Re: Liability Only car insurance
« Reply #10 on: May 12, 2015, 10:49:19 AM »
We've always just carried liability.

My personal opinion is that if you cannot afford to replace the car out of pocket: you've bought more car than you can afford.

Sid Hoffman

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Re: Liability Only car insurance
« Reply #11 on: May 12, 2015, 11:05:33 AM »
You've actually seen health insurance claims denied because injuries were from auto accidents?  That would be illegal in most states, including Arizona. 

http://www.phillipslaw.com/arizona-accident-faqs
http://www.rmiia.org/auto/steering_through_your_auto_policy/How_medical_bills_are_paid.asp

Well sadly, the kind of people who have liability-only auto insurance are often the ones who don't have health insurance either.  Even now, when it's strongly encouraged via taxation, you're not actually required to have health insurance.  I know at least a half dozen of my own family members who can't afford health insurance because of the way the law is written making it hard for people who are in and out of jobs to qualify for any subsidies while also affording health insurance.  Yet more proof that USA needs a total overhaul of its healthcare and insurance system.

AJ

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Re: Liability Only car insurance
« Reply #12 on: May 12, 2015, 11:12:34 AM »
You've actually seen health insurance claims denied because injuries were from auto accidents?  That would be illegal in most states, including Arizona. 

http://www.phillipslaw.com/arizona-accident-faqs
http://www.rmiia.org/auto/steering_through_your_auto_policy/How_medical_bills_are_paid.asp

Well sadly, the kind of people who have liability-only auto insurance are often the ones who don't have health insurance either.

But that's not the same thing as medical insurance denying a claim because the injuries were from an auto accident, which is what you said before. The question here is: if someone already has medical insurance do they need to pay more money to be double-covered through their auto insurance?

AJ

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Re: Liability Only car insurance
« Reply #13 on: May 12, 2015, 11:14:06 AM »
We carry liability only as a rule. I wouldn't want to own a car I couldn't self-insure.

beltim

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Re: Liability Only car insurance
« Reply #14 on: May 12, 2015, 11:24:01 AM »
You've actually seen health insurance claims denied because injuries were from auto accidents?  That would be illegal in most states, including Arizona. 

http://www.phillipslaw.com/arizona-accident-faqs
http://www.rmiia.org/auto/steering_through_your_auto_policy/How_medical_bills_are_paid.asp

Well sadly, the kind of people who have liability-only auto insurance are often the ones who don't have health insurance either.

But that's not the same thing as medical insurance denying a claim because the injuries were from an auto accident, which is what you said before. The question here is: if someone already has medical insurance do they need to pay more money to be double-covered through their auto insurance?

Exactly.  Paying for a medical rider on your auto insurance may be a good decision for someone who can't afford actual health insurance.  But your health insurer will cover you if you're injured in an auto accident.

beltim

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Re: Liability Only car insurance
« Reply #15 on: May 12, 2015, 11:25:37 AM »
How many out there carry liability only for their car insurance?

Backstory:

I recently moved from Virginia to Washington state. Like a responsible adult, I called up my friendly USAA insurance underwriter to update my car insurance. His name was Clark, and he was very sad to tell me my WA premium would be $300 more expensive than my VA insurance. The increase was due to some fangled thing called Personal Injury Protection. Doesn't exist in VA, but in WA it's mandatory and protects me and my passenger in the case of an accident. After a lot of back and forth I ended up dropping collision insurance, which kept the premium at the same level as VA.

It's possible that there's an error in communication, but Washington's web site says this insurance is NOT mandatory:
Quote

    It's your choice. You don't have to buy PIP, but by law (www.apps.leg.wa.gov) your insurance company must offer it to you.
    If you don't want PIP, you must reject it in writing. If you don't reject it in writing, your company has to add it to your policy and charge you for it.

http://www.insurance.wa.gov/your-insurance/auto-insurance/personal-injury-protection/

Eric

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Re: Liability Only car insurance
« Reply #16 on: May 12, 2015, 11:28:53 AM »
You've actually seen health insurance claims denied because injuries were from auto accidents?  That would be illegal in most states, including Arizona. 

http://www.phillipslaw.com/arizona-accident-faqs
http://www.rmiia.org/auto/steering_through_your_auto_policy/How_medical_bills_are_paid.asp

Well sadly, the kind of people who have liability-only auto insurance are often the ones who don't have health insurance either. 

And what "kind of people" are those?  I'd bet the majority on this forum carry only liability.  That's a pretty uninformed statement you're making.

Blonde Lawyer

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Re: Liability Only car insurance
« Reply #17 on: May 12, 2015, 11:38:05 AM »
This is not legal advice, just life advice I have picked up along the way.

When a lot of people say "liability only" they usually (but not always) also have underinsured/uninsured liability coverage.  That means if someone hits you with less insurance than you have or no insurance, your insurance steps into the shoes of what would be their insurance company and adjudicates the claim on your behalf.

Here is an example.  You get in a car accident and hurt yourself.  Your lost wages and medical bills equal $20,000.  Add pain and suffering and other non-economic damages (loss of enjoyment of prior activities, loss of consortium) your claim might now be worth $60,000.  Guy that hit you has $20,000 worth of insurance.  You get permission from your carrier first and then settle with his carrier for the policy limit.  You then go after your carrier for the remaining $40,000.

Personal injury protection or medical payment coverage is another beast.  These are no fault coverages that cover the medicals of you or a passenger.  They can be as low as $1000 or as high as $25,000 in my state.  Traditional health insurance will "front" the money on an injury from a car accident but will require (through lien or subrogation) to be paid back what they paid on your behalf from your settlement.  Your case isn't based on what you lost out of pocket but your total medicals.  So the above poster is correct that health insurance technically doesn't "cover" car accidents.  They will pay but they will get paid back if you sue.  If you don't sue, they have the right to sue for you in most cases but they rarely do it.  They also only get paid back what they actually paid (contractual rate) not what the doctor/hospital billed so your claim is actually higher than what you pay them back.  Plus, they will often share in your attorney fees and reduce their payback by 1/3rd.  Medpay and PIP does NOT usually have to be paid back.  So if you are injured and pay your bills with that instead of health insurance you get to keep more money from your settlement.

Things get dicier with self-insured health care plans.  You may not know you have one.  If your card says it is a third party administrator instead of an insurance company than your company is likely self insured.  That means there is a plan that sounds like health insurance that is administered by a company that usually sells health insurance but your company actually pays all of the claims, not the insurance company.  They operate under different laws than regular insurance.  They can require you to exhaust your medpay / PIP before paying any claims.  Bills will go to collections while your companies fight out who is paying at times.

As for whether you should have collision coverage for your vehicle, if I were in your shoes, I would have it for a few years, depending on the cost.  You drive a car worth $20k I believe you said.  That $20k is gone if you can total it.  It is great you can buy a new one but you still lose your $20k.  I'd be willing to pay up a few hundred dollars per year to insure my $20k.  If you were driving a $5000 vehicle my calculation would be different. 

beltim

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Re: Liability Only car insurance
« Reply #18 on: May 12, 2015, 11:57:51 AM »
Personal injury protection or medical payment coverage is another beast.  These are no fault coverages that cover the medicals of you or a passenger.  They can be as low as $1000 or as high as $25,000 in my state.  Traditional health insurance will "front" the money on an injury from a car accident but will require (through lien or subrogation) to be paid back what they paid on your behalf from your settlement.  Your case isn't based on what you lost out of pocket but your total medicals.  So the above poster is correct that health insurance technically doesn't "cover" car accidents.  They will pay but they will get paid back if you sue.  If you don't sue, they have the right to sue for you in most cases but they rarely do it. 

So if you don't have PIP or medical payment coverage, your health insurance will cover you.  Right?

MishMash

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Re: Liability Only car insurance
« Reply #19 on: May 12, 2015, 12:08:38 PM »
So, we just got a crash course in this last week when my dad was killed in a car accident that my mom was at fault for (he was a foot and a half in the grave anyway with health problems and probably only had a few months left anyway).  The PIP has been a GOD send.  It gave my mom 12k to bury my dad since he died in the accident, will cover all of her medical bills with a 250 dollar deductible up to 250k AND if there were other passengers in the car would cover them too.  Yes, you have Tricare Prime, but can you guarantee that all of your passengers at all times will have the same and that you will never drive with someone non Tricare covered in the car? 

It wasn't that much more per year to add it and I can tell you that it LITERALLY was piece of mind that we were thankful for.

Blonde Lawyer

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Re: Liability Only car insurance
« Reply #20 on: May 12, 2015, 02:18:27 PM »
Beltim,

In my state, you are correct that they would pay but they could seek legal action against the third party, insured or not, to pay them back.

MishMash,

I'm so sorry to hear about your dad.  What a tragic situation.

beltim

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Re: Liability Only car insurance
« Reply #21 on: May 12, 2015, 02:24:13 PM »
Beltim,

In my state, you are correct that they would pay but they could seek legal action against the third party, insured or not, to pay them back.

That's my understanding for my state as well.  Thanks!

James!

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Re: Liability Only car insurance
« Reply #22 on: May 12, 2015, 02:36:55 PM »
A lot of terms flying around here and some are being mis-stated. Here are definitions for comprehensive and collision coverage:

With Collision coverage, your insurance company pays for damage to your auto when you collide with another vehicle or object. If you hit a car, a pole or another nonliving object, Collision coverage will apply.

With Comprehensive coverage, your insurance company pays for damage to your auto caused by an event other than a collision, such as fire, theft or vandalism. If you hit an animal, or if your auto is flooded or stolen, Comprehensive coverage will apply.

From: https://www.progressive.com/glossary/comprehensive-and-collision/

I think you should almost always carry comprehensive, and it is very inexpensive. Comprehensive for myself and my wife on two vehicles totals $79/yr. YMMV obviously, but relative to collision it is very cheap.

Collision is the expensive coverage. The important thing to understand is that it covers damage from an accident that is your fault.

If the accident is not your fault, you're covered either by the other driver's insurance (hopefully) or the under/un insured motorist coverage that you presumably have. (If you don't, you should. Mine is $16/yr)

So basically if your collision coverage is $300, and your vehicle is 20k, the math is as follows.

20,000/300 is 66.666666.

So every 66.66 years you have paid $20k in insurance premiums for that coverage. If you crash and utilize the coverage more than once every 66.66 years, the coverage was worth having. If you don't crash at least once every 66.66 years, the coverage was not worth it.

Obviously your vehicle depreciates, so that equation isn't perfect. But even if you assumed an average vehicle value over the life of the policy of only 10k for the car, then it's still 33.33 years. In reality your premium decreases over time as the vehicle depreciates and you age (cheaper to insure) so that number goes back up somewhere.

I recently went through a similar thought process and ultimately decided to keep coverage. For me, that number would have to be less than ~10 to be worth it. Totally up to you, but I hope that helps!


Cheers,
James

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Re: Liability Only car insurance
« Reply #23 on: May 12, 2015, 02:46:04 PM »
I had liability / uninsured coverage only on my 13 y.o. mini van. 
It was an ugly beast worth about $3k with a taped up bumper because I did not need fancy looking new one after the snowbank incident.  Coverage was $80/month for a $1 million liability policy, and definitely the more expensive part of the insurance.

If you have no cash problems, then pay as you go to fix up or replace your car, or just drive an "ugly" one.  In this case, you don't need to protect your CAR with insurance (collision / comprehensive).  But you do need to protect you, your passengers, other people you hit, and their car / property -- as you will be forced to pay to repair their damaged BMW or hydrangea, or whatever.

TN_Steve

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Re: Liability Only car insurance
« Reply #24 on: May 12, 2015, 02:56:45 PM »
...

Well sadly, the kind of people who have liability-only auto insurance are often the ones who don't have health insurance either.  Even now, when it's strongly encouraged via taxation, you're not actually required to have health insurance.  I know at least a half dozen of my own family members who can't afford health insurance because of the way the law is written making it hard for people who are in and out of jobs to qualify for any subsidies while also affording health insurance.  Yet more proof that USA needs a total overhaul of its healthcare and insurance system.

Actually, in my case, we are the type of people who would like to have a 20K (or greater) deductible health insurance policy that is limited to major medical, but are barred by law from doing so.  :-)  Insurance is for what you can't afford to pay out of pocket, not for annual exams and other type of routine maintenance.  I do agree that we need a total overhaul of the healthcare and insurance systems--but somehow doubt that we are on the same page there. ... 


Sid Hoffman

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Re: Liability Only car insurance
« Reply #25 on: May 12, 2015, 04:03:26 PM »
Actually, in my case, we are the type of people who would like to have a 20K (or greater) deductible health insurance policy that is limited to major medical, but are barred by law from doing so.  :-)  Insurance is for what you can't afford to pay out of pocket, not for annual exams and other type of routine maintenance.  I do agree that we need a total overhaul of the healthcare and insurance systems--but somehow doubt that we are on the same page there. ...

Yeah that's one thing that gave me a chuckle once I understood how insurance in general works - that it's supposed to only be for major events that you can't afford out of pocket.  Once I understood that, I realized that so many people are coming from union families or government jobs that didn't really have health insurance so much as they had full healthcare plans.  Those plans covered all your healthcare costs, similar to what you may find in Canada, France, or a few other countries.  True health insurance really isn't supposed to cover anything except what you can't afford to pay for yourself.

However, in my increasing age and decreasing optimism for society to get smarter about personal finances, I don't think people can be trusted with their own money anymore when it comes to healthcare.  I'm a very conservative guy, but when it comes to healthcare I'd be perfectly open to any options as long as they work, including complete government control of the entire healthcare system.  My main hesitation around that point however stems from the long wait times and poorer service I'm reading about from Canada and the UK.  I'd hate to think that healthcare could get even worse in America, but honestly, I do realize that anything can get worse.

Anyway, on the car insurance topic, I recently used the Progressive site to run about 10 or 12 different options.  It was actually cheaper to keep full coverage but increase the deductible to $2000 (above the value of my car) than it was to drop collision/comprehensive coverage entirely.  All I can guess is that they have statistics showing that people who don't have comprehensive are more likely to cause an at-fault accident.  So I actually ended up keeping full coverage and at a cost of less than switching to liability only.  The OP might want to run his options and see if he's got a similar case for him/her self.  At the end of it all, I am only paying about $34/month for full coverage which still includes $0 deductible windshield coverage and $250k limits.

Another thing to keep in mind is that by keeping full coverage on my own car, this means I can decline the expensive short-term policies from car rental places, since my own full coverage takes care of it, albeit at that $2000 deductible level.

zurich78

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Re: Liability Only car insurance
« Reply #26 on: May 12, 2015, 08:34:47 PM »
Wouldn't it make sense to cover for bodily injury?  There are so many litigious people out there who will come after you so I load up on that to protect myself from litigation.