Author Topic: Trying to cut down on insurance bill  (Read 964 times)

MountainTown

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Trying to cut down on insurance bill
« on: September 30, 2018, 10:11:53 AM »
I am insuring two cars.
1.) 2013 Nissan Rogue. 60k miles
2.) 2003 Toyota Corolla S. 130k miles??


My premium for both is about 404.20. I go a little higher on the liability limits.  I only carry liability on the Corolla. I do have roadside assistance. It's a convenience I am happy to pay for when I am outta town and my wife is alone with cars.

I have a $325k NW, which includes $55k in cash that will hopefully some day be a down payment. Since I have that much cash sitting around would anyone recommend raising deductible on collision to $2500?

On the other hand my comp coverage is really low. I guess I do this because I have had so many incidents where it could have been covered by comp but it seems like comp incidents tend to be lower situations like someone broke my window, scratched the door, or even an animal or something might not always be much more than $500 to $100. So right now it's at $250. Maybe that thinking is wrong too...should I increase that?

Thanks!


secondcor521

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Re: Trying to cut down on insurance bill
« Reply #1 on: September 30, 2018, 11:12:11 AM »
Personally I tend to think that insurance is a negative expected value proposition because the insurance company has their expenses and profit above and beyond the claims they pay.

So I have tried to self insure for as much as I could for as long as I could.  I have never carried roadside assistance coverage.  I haven't had comprehensive or collision for at least 12 years.  The deductible on my home insurance is $10K.

The way I would look at it though, for this sort of thing is to take the difference in monthly premium at the various deductible levels and do a simple break even analysis.  If comp and collision with a $250 deductible is $50 a month and comp and collision with a $1000 deductible is $25 a month, then that means a $750 difference in deductible for a $25 monthly fee.  $750 / $25 is 30 months - does a comp or collision claim above $1000 come along that often on average?  If not, then switch to the higher deductible.  If so, maybe look at taking some driving classes :-)

I think temperment comes into play also.  Mathematically coming out ahead isn't as valuable if you or your wife are stressed out about it all the time or if you get emotional having to write a $1000 check when it could have been $250.  Partly for this reason my kids and I are on Silver level coverage even though Bronze is probably more cost effective - their mother likes it that way and even though she and I are no longer married there is more value to her in being at the Silver level than to me in being at the Bronze level.

After doing this across all kinds of insurance coverage, and not having had any claims in the past 12 years, I've built up quite a bit of buffer, so now I'm playing with house money as it were.  I do think there is also a slight effect in me being more careful because I'd have to pay for things (my health, my car, my house) if I break them.

Good luck!

AccidentalMiser

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Re: Trying to cut down on insurance bill
« Reply #2 on: September 30, 2018, 12:41:47 PM »
@secondcor521 makes excellent points.

The purpose of insurance is to cover financial risks that cannot be tolerated should the worst happen.  If you can afford higher deductibles, then switch to them.  All my homes have a 5k deductible and car 1k.  My other car doesn't have comp or collision as it's only worth 6k and I'll buy another like it if I wreck it. 

Also, I'm assuming that 404 is for a six-month premium or is it per month? 

So, yes, I would recommend raising your deductibles PROVIDED you and all your drivers are careful drivers.

MountainTown

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Re: Trying to cut down on insurance bill
« Reply #3 on: September 30, 2018, 02:07:00 PM »
yea that was a six month break down...

chasesfish

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Re: Trying to cut down on insurance bill
« Reply #4 on: September 30, 2018, 02:25:48 PM »
Have you looked at putting umbrella insurance in place to cover the higher liability, then reducing the car premium?  That would also cover homeowners/renters liabilities.

The 2013 is a rough call, probably still worth the collision.  How long has it been since you shopped it?  I've found insurance tends to be cheap to get your business, then creep up the next couple years.  I've had to change every 2-3 years because of this

MountainTown

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Re: Trying to cut down on insurance bill
« Reply #5 on: September 30, 2018, 02:37:26 PM »
ya i have heard that/....guess is should shop it. I have geico now. Any recommendations?

Finances_With_Purpose

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Re: Trying to cut down on insurance bill
« Reply #6 on: September 30, 2018, 03:14:19 PM »
@secondcor521 makes excellent points.

The purpose of insurance is to cover financial risks that cannot be tolerated should the worst happen.  If you can afford higher deductibles, then switch to them.  All my homes have a 5k deductible and car 1k.  My other car doesn't have comp or collision as it's only worth 6k and I'll buy another like it if I wreck it. 

Also, I'm assuming that 404 is for a six-month premium or is it per month? 

So, yes, I would recommend raising your deductibles PROVIDED you and all your drivers are careful drivers.

This.  Agree with @secondcor521 and this.  Insurance is for catastrophes, things you can't cover yourself. 

The best time to buy insurance is (1) if it covers a catastrophe that you can't, or (2) if you know you're way riskier than the insurance is priced at for some odd reason (that won't ruin your coverage/be outside of your policy). 

With a sufficient emergency fund, collision isn't all that helpful, I find.  Plus, you want some savings for emergencies anyway so that you don't have to take the first check someone offers you if you ever DO have a bad accident; you can hold out and negotiate.

MountainTown

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Re: Trying to cut down on insurance bill
« Reply #7 on: September 30, 2018, 03:37:10 PM »
Hmmm I think at this point I would like to continue to cover the Rogue on collision. I guess my question is does it really break even to save $30 a year but possibly pay more than $1500 in deductible? I think a part of me is on the fence on over whether that's really worth it. Sure I have $50k in cash so can write a check but $1000 vs $2,500 might be a little painful....

chasesfish

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Re: Trying to cut down on insurance bill
« Reply #8 on: September 30, 2018, 06:59:19 PM »
ya i have heard that/....guess is should shop it. I have geico now. Any recommendations?

I've been with Allstate, State Farm, and Liberty Mutual.   Claims experience as the policy owner was good on all when needed.

I've been hit by a Geico insured driver and I was treated poorly, probably more of an isolated incident but the home/auto discount combined seems to beat what I can get on auto-only with Geico.  Getting a house insured in Texas is expensive with our hailstorms/tornados