Author Topic: DMV insurance bond...  (Read 2254 times)

FuckRx

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DMV insurance bond...
« on: August 30, 2013, 02:19:11 PM »

wanted to know if anyone is doing this...
the lowest insurance i could find for me/my city/car is about $37/mo for liability coverage..
the car being insured is worth less than 3k....

in california i can get a bond (somewhere in the $35,000) range that will allow me to not carry insurance ...
i can put that money up myself or pay $1,400 and a company will issue that bond for me ....
thoughts?

Self-employed-swami

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Re: DMV insurance bond...
« Reply #1 on: August 30, 2013, 02:20:15 PM »
I wish that was an option in Canada, I'd do it in a heartbeat.

StarryC

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Re: DMV insurance bond...
« Reply #2 on: August 30, 2013, 02:43:30 PM »
One thing to remember about an insurance policy is it provides two coverages: Indemnity and Defense.  Your bond would be the "indemnity."  That's the amount that the insurer would pay on your behalf, the "limits."  "Defense" is that if you get sued they pay for your lawyer and handle the evaluation and negotiation of the other party's claim.  You might be willing to take that on, but you should know that you are doing so.

Also, consider how often, if ever, you leave the state in your car or drive another car in another state.  Your policy probably provides coverage in a rental car, and likely even promises to meet the minimum limits if you are in another state.  If you travel to Oregon, where the minimum is $25,000 instead of $15,000, your bond might not meet the requirements and you could get hit with a driving uninsured ticket if something happens. 

The bond price is the same as about 3 years of insurance.  If you put up the bond, you probably have to keep the money in a pretty secure, low earning account.  If you could be getting 7% on the money in an investment account, in three years you'd make about $8,000 (I think?)  I think that means the $1,400 for the bond is a better deal than putting it up yourself.  The bond price is only a better deal if you don't get in an accident that takes the limits in the next 3 years.

Nords

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Re: DMV insurance bond...
« Reply #3 on: August 30, 2013, 11:08:07 PM »
the lowest insurance i could find for me/my city/car is about $37/mo for liability coverage..
the car being insured is worth less than 3k....
Liability coverage is intended to protect your gross worth (the amount that people sue you for), not the value of your car.

Is it worth $37/month to protect the value of your assets?  When you say "$35K bond", does that mean the limit on your coverage is $35K?  How's that compare to the value of your assets?

Daleth

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Re: DMV insurance bond...
« Reply #4 on: August 31, 2013, 08:24:15 AM »
Starry is absolutely right. If you have car insurance and someone sues you over an accident, your insurer has to pay for your lawyers. That's in addition to your actual insurance coverage--say you have $250k of liability coverage; the insurer also has to pony up the cost of your lawyers on top of that $250k. And the insurer is motivated to pay for good lawyers because if you lose the case, it's the insurer who has to cough up that $250k (or whatever your coverage is).

If you get in an accident and someone sues you, and all you have is an insurance bond or self insurance, YOU have to pay for the lawyers yourself. Tens of thousands of dollars could go right out the window, never to be seen again (even if you win, you're not going to get any money from the other side to pay you back for the cost of the lawyers). And if you lose, you lose whatever the jury says you lose--you might be hit with a $150k judgment, let's say--and if your paltry $35k of self-insurance or bond doesn't cover it, they can come after your house, your car, your bank accounts, your wages... whatever it takes to get the $150k (or whatever) that they're owed.

So my opinion obviously is that at least in the US, where lawsuits are rampant, it would be penny-wise and pound foolish Togo the insurance bond/self-insured route.