Author Topic: Why is carrying minimum car insurance such common advice?  (Read 2669 times)

DavidDoes

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Why is carrying minimum car insurance such common advice?
« on: September 20, 2019, 11:37:27 PM »
Most of us here either don't drive at all, or drive used vehicles.

My family just got a vehicle after having been car-free for three years. We also carried no auto insurance of any kind. When we started shopping, we were pretty alarmed at many rates, but pleasantly surprised by others. We finally settled on Progressive.

At first, I was considering the minimum required coverage, because "it's silly to pay for full coverage when you drive a used car and you could be saving that money instead." It's a blanket statement that gets through around in the FI community, and I had come to almost believe it.

Here is our coverage:

Code: [Select]
Bodily Injury & Property Damage Liability:   
$25,000 each person
$50,000 each accident
$50,000 each accident $339.00

Underinsured Motorist:
$25,000 each person
$50,000 each accident $39.00

Underinsured Motorist Property Damage:
$10,000 each accident
$100 deductible or $300 deductible for hit & run     $21.00

Personal Injury Protection:
$10,000    $77.00

Comprehensive:
$250 deductible      $27.00

Collision:
$500 deductible      $135.00

Rental Reimbursement:
$40 each day
maximum 30 days $26.00

Roadside Assistance:
Selected $11.00

Total rate for this vehicle:
$675.00

We paid in-full and the policy is for six months. We live in a city that constantly ranks near the top for worst drivers. We drive a 2009 Honda Fit with 122,000 miles that we purchased in July for $5,700. Our used market around here is typically much higher than other cities, and we actually missed out on a few other vehicles that had sold less than a day after being posted. The used car market is just as competitive as the housing market here. We only purchase private party.

All that said... The cheapest basic insurance I found was a whopping $36/mo cheaper. Thirty-six. If I were to only value this policy based on its comprehensive coverage, and let's say the vehicle is worth $4,000 when it theoretically is totaled... It would still take 111 months of saving that $36 for this policy to become more expensive than if we went with a basic policy.

I think - for us - $36/mo is chump change in exchange for having to spend weeks looking for a good vehicle with a fair price, and finding one to check out before it sells.

I just wanted to share, and to ask why this piece of advice is given in such a blanket manner.

terran

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Re: Why is carrying minimum car insurance such common advice?
« Reply #1 on: September 21, 2019, 05:40:05 AM »
You should absolutely not carry the minimum insurance. Dropping comprehensive and/or collision, especially on an inexpensive car is a fine idea, as is having a high deductible, but your liability limits are way too low. If you injure someone with those limits the insurance company has minimal incentive to defend you, and the lawyer suing you will have minimal incentive to settle for what insurance can offer them. They'll come after you personally, including taking future wages. You should increase your liability limits well above the required minimums, and maybe get umbrella insurance too. You might also consider increasing uninsured/underinsured limits so you're covered if you or your family is injured by someone with coverage as bad as what you have now.

Edit: The advice you're probably thinking of (certainly the advice I give, and that I've seen others give most often) is that you shouldn't carry insurance to cover a loss you can (easily) afford to cover yourself, but that you should carry maximal insurance to cover a loss you can't cover yourself. Most mustachians can easily afford to pay for a $5700 car or a high deductible. Some mustachians (like the blog author, Pete) can afford to cover a several hundred thousand dollar house. Any already FI mustachian can cover the cost of their disability or death. However, almost no mustachian can cover potential healthcare costs (at least in the US) or liability from injuring someone else, so good health insurance (although a high deductible is fine) and high liability limits are important. Non FI mustachians should also carry disability insurance and term life insurance in case they can't provide for themselves or their families until they can (when they're FI).
« Last Edit: September 21, 2019, 07:34:27 AM by terran »

NotJen

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Re: Why is carrying minimum car insurance such common advice?
« Reply #2 on: September 21, 2019, 07:15:15 AM »
Agree 100% with terran.

I've never seen the advice to carry the state minimum liability limits on car insurance - especially if you have any assets or a decent job.  I go for 100/300/100 and higher deductibles ($1000) to offset the cost.  The savings by dropping down to state minimums is really not worth the risk.  What you have is very close to the minimum for my state.

minimustache1985

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Re: Why is carrying minimum car insurance such common advice?
« Reply #3 on: September 21, 2019, 01:18:55 PM »
All that said... The cheapest basic insurance I found was a whopping $36/mo cheaper. Thirty-six. If I were to only value this policy based on its comprehensive coverage, and let's say the vehicle is worth $4,000 when it theoretically is totaled... It would still take 111 months of saving that $36 for this policy to become more expensive than if we went with a basic policy.

I think - for us - $36/mo is chump change in exchange for having to spend weeks looking for a good vehicle with a fair price, and finding one to check out before it sells.

You absolutely want above the minimum liability for the reasons Terran stated.  Medical costs add up QUICK.

The 9+ year payback on the $36 is up to you on if you feel thatís worthwhile.  One thing to keep in mind is they cut you a check, they donít spend time finding a good replacement vehicle at a fair price- it will still take you tile and effort to do that regardless so the time it takes you to find a replacement shouldnít be a factor in that decision.

lutorm

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Re: Why is carrying minimum car insurance such common advice?
« Reply #4 on: September 21, 2019, 07:53:23 PM »
Terran said it. Comprehensive/collision is not the important part -- the losses there are capped at the (insignificant) value of the car. It's the bodily injury liability you have to worry about, if you injure someone (or more than one) there's essentially no upper limit on what you can be liable for. As in entire stash gone in one swoop.

DavidDoes

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Re: Why is carrying minimum car insurance such common advice?
« Reply #5 on: September 21, 2019, 08:28:35 PM »
Hi friends,

Good call there on the liability coverages. I checked with Ameriprise, and it'll only be $48 more per six months to get the following coverage:

Code: [Select]
Bodily Injury & Property Damage Liability: 100/300/100
Under/Un-insured: 100/300/100
PIP: Included (not sure on the amount here)
Comprehensive: $250 deductible
Collision: $500 deductible
Rental: $40 per day / $1200 per claim
Roadside: Towing, $75 covered

I might look at getting my USAA account re-established. I stopped using it, but I've heard nothing but great things about their insurance.

terran

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Re: Why is carrying minimum car insurance such common advice?
« Reply #6 on: September 21, 2019, 09:11:15 PM »
See what happens if you increase the deductibles. Try $1000 (assuming you could afford that).

AnnaGrowsAMustache

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Re: Why is carrying minimum car insurance such common advice?
« Reply #7 on: September 22, 2019, 02:00:33 AM »
I don't know how the USA system works, but you'd be an absolute fool not to have third party insurance to cover your liability to others in an accident.

terran

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Re: Why is carrying minimum car insurance such common advice?
« Reply #8 on: September 22, 2019, 05:36:38 AM »
I don't know how the USA system works, but you'd be an absolute fool not to have third party insurance to cover your liability to others in an accident.

Most states require at least a minimal level of liability insurance (there may be a few that don't), but it it often quite low (like $25k), so carrying more is a very good idea for anyone with assets or a good job. I could be wrong, but we probably have one of the most litigious societies in the world.

AnnaGrowsAMustache

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Re: Why is carrying minimum car insurance such common advice?
« Reply #9 on: September 22, 2019, 07:27:44 AM »
I don't know how the USA system works, but you'd be an absolute fool not to have third party insurance to cover your liability to others in an accident.

Most states require at least a minimal level of liability insurance (there may be a few that don't), but it it often quite low (like $25k), so carrying more is a very good idea for anyone with assets or a good job. I could be wrong, but we probably have one of the most litigious societies in the world.

That's just absolute insanity. If you run into a luxury car, or even a power/light pole, you're liable for a lot more than that. In NZ you can't sue for personal injury (we have a compulsory insurance system which pays for all accident cover for everyone, and it's no fault. Even tourists are eligible for it) but third party insurance covers you for hundreds of thousands of dollars of liability and it's cheap - $30 a month cheap. You can't afford to be on the road at all if you can't afford third party insurance. You may as well be just waving a big sign at the universe saying BANKRUPT ME PLEASE. I've had car accidents. My insurance covered the damage and the NZ ACC health insurance system (you can't opt out) covered all medical fees including ambulance. It cost me nothing but the $500 excess.

Just FYI, full cover car insurance for my 2001 Corolla, which is parked at night on a driveway and not alarmed, including no excess glass cover and third party liability up to half a million $, is $40 a month. ACC cover is paid for out of a tiny levy on my wages, plus a levy on petrol, plus a levy on car registration fees. I could trip on the carpet in your front room and break my leg and it won't cost either one of us a cent. I have no idea what your country is up to on the insurance and healthcare front but I'm pretty sure you're all fucked.

DavidDoes

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Re: Why is carrying minimum car insurance such common advice?
« Reply #10 on: September 23, 2019, 01:13:02 AM »
Believe me, if I could live in a nation with more socialized services, I would. Instead, I spend over $5,500/yr on services I need, and then have to pay again to use them.

ROF Expat

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Re: Why is carrying minimum car insurance such common advice?
« Reply #11 on: September 23, 2019, 02:55:54 AM »
DavidDoes,

I am fully on board with all the previous posters who have advised you to have more than the minimum required liability insurance.  Personally, I have much more than the minimum as well as an umbrella policy. 

That said, I don't pay for collision or comprehensive.  The insurance companies' actuaries are confident that they are charging me more than they will pay me, and I believe them.  Thinking I'm going to come out ahead with insurance is like thinking I'll make money by visiting a casino. 

When you say that it would take 111 months of the $36 per month to cover  the payment for a $4,000 loss, I don't think that's entirely accurate.  First of all, the insurance company will only pay you $3,500 since there's a $500 deductible.  That's only about eight years at $36 per month.  But the more significant factor is the opportunity cost of consistently paying that "chump change" $36 per month.  $36 a month invested at 11% over 30 years becomes about $100,000.  Invested over another 30 years it will be over $2 million. 

By coincidence, I've been driving about 30 years now and I've only had collision insurance for about one year (when I was young and foolish and had a car loan).  I think I've had three accidents that that might have merited an insurance claim (if I had had insurance), but I paid for the repairs in the first two cases for a total of about $2,000.  By coincidence, a third accident happened just a few weeks ago.  Expensive bodywork will probably cost me about $3,000 to return the car to "like new."  I will happily pay out of pocket and figure I'm still about $95,000 ahead by not buying insurance.  At this point, I'd have to total a lot of cars to make not having collision insurance a bad idea.  And it is worth remembering that if you actually make claims on your insurance, your rate will go up, costing you even more. 


ROF Expat

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Re: Why is carrying minimum car insurance such common advice?
« Reply #12 on: September 23, 2019, 03:07:11 AM »
BTW,

If you are eligible for USAA membership, it is well worth asking them insurance quotes.  There are several different types of USAA membership and they offer different rates and benefits (Military officers will typically be offered better deals than people who get membership as military dependents, for example), but they are all usually pretty good.  There's no charge for membership (if you qualify) and in my experience USAA customer service is some of the best in the business.  There can be good discounts for having multiple insurance policies, as well. 

terran

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Re: Why is carrying minimum car insurance such common advice?
« Reply #13 on: September 23, 2019, 06:12:10 AM »
That said, I don't pay for collision or comprehensive.  The insurance companies' actuaries are confident that they are charging me more than they will pay me, and I believe them.  Thinking I'm going to come out ahead with insurance is like thinking I'll make money by visiting a casino. 

To be fair, the actuaries are also confident they're charging more than the'll pay you on liability coverage too. That's just how insurance works. And this is why the blanket advice is/should be: buy insurance to cover losses you can't afford, self insure for losses you can afford. Some people can't afford to buy a replacement car to get to work if theirs is destroyed/stolen/etc, so they should carry comprehensive and collision. Other people can afford to buy a replacement car (or live without) so they perhaps shouldn't carry comprehensive and collision.

I think there's also a middle ground. I could afford to replace my car (I could afford to replace a $50k car, for that matter), but I wouldn't be happy about. I know I'm less bothered by the cost of consistently carrying comprehensive and collision than I would be by having a total loss of the value of my car, so I carry it. This might be an emotional decision rather than a totally mathematically optimal decision, but I'm ok with that.

Boofinator

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Re: Why is carrying minimum car insurance such common advice?
« Reply #14 on: September 23, 2019, 08:54:08 AM »
One additional thing to consider: It is a basic tenet of Mustachianism to minimize driving to the extent possible. For example, I consider my current situation facepunchworthy, but when I compare my household miles driven per year to the average in my state, we're at about half the average (according to this site: https://www.carinsurance.com/Articles/average-miles-driven-per-year-by-state.aspx). Many others on this site drive far less than I do. At what point do the costs of liability insurance start outweighing the risks of not having insurance? 10,000 miles per year? 1,000 miles per year? 100 miles per year?

ROF Expat

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Re: Why is carrying minimum car insurance such common advice?
« Reply #15 on: September 23, 2019, 09:18:28 AM »
That said, I don't pay for collision or comprehensive.  The insurance companies' actuaries are confident that they are charging me more than they will pay me, and I believe them.  Thinking I'm going to come out ahead with insurance is like thinking I'll make money by visiting a casino. 

To be fair, the actuaries are also confident they're charging more than the'll pay you on liability coverage too. That's just how insurance works. And this is why the blanket advice is/should be: buy insurance to cover losses you can't afford, self insure for losses you can afford. Some people can't afford to buy a replacement car to get to work if theirs is destroyed/stolen/etc, so they should carry comprehensive and collision. Other people can afford to buy a replacement car (or live without) so they perhaps shouldn't carry comprehensive and collision.

I think there's also a middle ground. I could afford to replace my car (I could afford to replace a $50k car, for that matter), but I wouldn't be happy about. I know I'm less bothered by the cost of consistently carrying comprehensive and collision than I would be by having a total loss of the value of my car, so I carry it. This might be an emotional decision rather than a totally mathematically optimal decision, but I'm ok with that.

Terran,

I agree with you on the idea that one buys insurance for losses you can't (or really don't want to) cover.  The reason I pressed on the actuaries is because I interpreted the OP's first post as pushing the idea that the $36 per month was a lost cost and "good deal."  My own view is that it is a cost you might have to pay if you can't afford to replace your car, but that it certainly isn't a good deal over the long term if you can afford to replace your car. 

I definitely get your feeling that some financial decisions involve emotion rather than just mathematical considerations.  I just canceled my term life insurance because my untimely demise will no longer cause a financial hardship for my family.  It was based on the math, but I had to think long and hard to convince myself that it would be a responsible decision.  By the same token, I also paid off my house for purely emotional reasons, because mathematically there's a very strong case for keeping the mortgage.   

teltic

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Re: Why is carrying minimum car insurance such common advice?
« Reply #16 on: September 23, 2019, 10:27:34 AM »
Interesting reading comments.  I agree in general mustachians are against insurance. 

My car was totaled a month ago (someone drove through  my parked car).  I had state minimum liability only insurance... Luckily, there was a police report on my windshield with the persons insurance info.

Due to having their insurance; they paid $8800 for my car (They believed my 2013 Hyundai Elantra was worth $7500, and then threw some money for fees & taxes), and ~$500 for uber/lyft/hertz receipts.

If it was a hit and run situation, I'd sell my totaled car for $1k for scrap metal/parts, ride my bike to avoid the uber/lyft/hertz... & lose out on the $8800 check for my car (I think I could have sold my car via private party for $7k, so their insurance overpaid me a bit after fighting back and forth).



$184 increase annually for $2500 deductible (both collision and comprehensive)... $4500 savings after paying the $2500 deductible... divided by $184 = 27 years.  Probably less with compounding...
$478 increase annually for $200 deductible. (both collision and comp)... $6800 savings after paying the $200 deductible... divided by $478 = 14 years?

Online says average person is involved in a crash every 17.8 years...



Increasing bodily injury liability from $25k/$65k/$15k to $100k/$300k/$50k costs an extra $50 a year.  This is probably worth the piece of mind...


Bah I don't know!  I'm a risk taker so saving the $50 + $478 to take the risk is fine with me.  Am I crazy?  Probably.  Is someone "stupid" by having full coverage?  Probably not.  I think as long as you shop for a good deal you should be fine.

FYI: I'm using Geico.  $181.26 per 6 months getting state minimum on a 2015 Chevy Volt (paid $12k). Networth is $270k which is why I lean towards "self insuring".


Edit: http://www.rmiia.org/auto/traffic_safety/Cost_of_crashes.asp

"In 2013, the average auto liability claim for property damage was $3,231; the average auto liability claim for bodily injury was $15,443 (ISO, a Verisk Analytics company)."

^^  This makes me feel better about having minimum liability.  State minimum is $25k per person, and $15k for property damage.  Even adjusting inflation from 2013 numbers to today, I'd still be covered for the average claim.

... I would be in trouble if I drove through a building with a trunk full of napalm.

"In 2013, the average collision claim was $3,144; the average comprehensive claim was $1,621 (ISO, a Verisk Analytics company)."

This makes me believe that collision/comprehensive is only worth it with a low deductible plan.  With a $2500 deductible plan, I may as well reject collision insurance and simply pay the extra $644 when I get into that average crash.


Overall insurance is a tool to smooth out cash flow.... At a cost.  I will accept the future ~$5k expense but save $478 a year.  I'm betting on myself to not crash as often as the average person does. even if I do crash just as often, I've saving the cost of insurance by paying it all out of hand.

If I am that unique person who crashes every year, or more frequently than average.... Well then, fuck.  I should have had insurance.  For me, It's worth taking the risk, although I see after researching that having more insurance isn't as crazy as I originally thought.

« Last Edit: September 23, 2019, 01:18:27 PM by teltic »

seattlecyclone

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Re: Why is carrying minimum car insurance such common advice?
« Reply #17 on: September 23, 2019, 10:53:24 AM »
One additional thing to consider: It is a basic tenet of Mustachianism to minimize driving to the extent possible. For example, I consider my current situation facepunchworthy, but when I compare my household miles driven per year to the average in my state, we're at about half the average (according to this site: https://www.carinsurance.com/Articles/average-miles-driven-per-year-by-state.aspx). Many others on this site drive far less than I do. At what point do the costs of liability insurance start outweighing the risks of not having insurance? 10,000 miles per year? 1,000 miles per year? 100 miles per year?

Always carry strong liability insurance. All it takes is one crash where you're at fault and uninsured/underinsured to completely wipe out your finances. You should be able to find a company that will charge you less if you drive less.

We have liability-only coverage. Our car is a fraction of a percent of our net worth. We don't need to insure the object. A crash could easily expose us to all of our net worth in legal liability. We do need to insure that.

Car Jack

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Re: Why is carrying minimum car insurance such common advice?
« Reply #18 on: September 23, 2019, 01:12:41 PM »
$500k liability and then an umbrella with $2M added liability.  One car carries comp for windshield coverage (no deductible) and only liability otherwise.  The rest of my cars also carry full collision.

Look at the price, the value of the car, the deductible, then decide.  Our 10 year old Fusion got into an accident recently with my 19 year old son.  Relatively minor, cosmetic damage, but from the front fender to the rear quarter, every panel was dented and the mirror was destroyed.  Insurance totaled the car.  I bought back at 10% value.  $1k deductible.  I spent $25 for a junkyard mirror (power), installed and wired it (it had more electrical stuff than my car has) and it works perfectly.  So I have my car which still drives perfectly and $4800 in my pocket.  I cancelled collision.  I know my insurance bill will be up, but that would happen regardless.


Villanelle

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Re: Why is carrying minimum car insurance such common advice?
« Reply #19 on: September 23, 2019, 01:36:29 PM »
Hi friends,

Good call there on the liability coverages. I checked with Ameriprise, and it'll only be $48 more per six months to get the following coverage:

Code: [Select]
Bodily Injury & Property Damage Liability: 100/300/100
Under/Un-insured: 100/300/100
PIP: Included (not sure on the amount here)
Comprehensive: $250 deductible
Collision: $500 deductible
Rental: $40 per day / $1200 per claim
Roadside: Towing, $75 covered

I might look at getting my USAA account re-established. I stopped using it, but I've heard nothing but great things about their insurance.

I've got USAA and adore them for so many reasons.  But be aware that in many (most?) cases, they are not the cheapest. (This is generally from AD families, though most of it is via Facebook so I can't always be sure if it is O or E families in some groups, and I'm told O families have lower rates, though I don't know if that's urban legend.)  For some people, they may be, but based on what I've heard from many people, they are often more expensive.  I'm paying for the amazing service and the fact that they do things many other carriers won't (like insuring our vehicles when we lived in Germany and our possessions via renters insurance when we lived in Japan).  I will sing their praises from the rooftops, but not necessarily due to costs.

Still, it can't hurt to call and get a quote. 

Schaefer Light

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Re: Why is carrying minimum car insurance such common advice?
« Reply #20 on: September 23, 2019, 03:00:26 PM »
Thanks to the OP for starting this thread.  After reading it and reviewing my policy, I decided to add a $1M umbrella policy and drop collision coverage.  The medical liability stuff scares the crap out of me, so I feel much better with the umbrella coverage in place.  My monthly bill is going to go up by $20 or so, but I think it's worth it.  I don't want to put my whole "FIRE-stache" at risk.

MilesTeg

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Re: Why is carrying minimum car insurance such common advice?
« Reply #21 on: September 23, 2019, 11:16:20 PM »
Liability is a must to have. 100/300/100 or higher. Even than can easily be exhausted if you cause a multi car collision and/or severely injure someone.

Umbrella insurance is super cheap, and can protect your stash above and beyond your car policy in the event you cause an accident. However, insurance companies will require 100/300/100 of car liability coverage and home/renters insurance to have umbrella insurance (which is one reason it can be so cheap, it takes an unusually major f-up to kick in). Umbrella accounts also cover your legal defense.

Boofinator

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Re: Why is carrying minimum car insurance such common advice?
« Reply #22 on: September 24, 2019, 09:47:39 AM »
One additional thing to consider: It is a basic tenet of Mustachianism to minimize driving to the extent possible. For example, I consider my current situation facepunchworthy, but when I compare my household miles driven per year to the average in my state, we're at about half the average (according to this site: https://www.carinsurance.com/Articles/average-miles-driven-per-year-by-state.aspx). Many others on this site drive far less than I do. At what point do the costs of liability insurance start outweighing the risks of not having insurance? 10,000 miles per year? 1,000 miles per year? 100 miles per year?

Always carry strong liability insurance. All it takes is one crash where you're at fault and uninsured/underinsured to completely wipe out your finances. You should be able to find a company that will charge you less if you drive less.

We have liability-only coverage. Our car is a fraction of a percent of our net worth. We don't need to insure the object. A crash could easily expose us to all of our net worth in legal liability. We do need to insure that.

Always is a very strong word, though I agree that one is taking a small (albeit very consequential) risk if one doesn't insure. Perhaps when I am officially FI I will see the light and insure, though I am a risk-taker by nature (I probably have a much better chance of dying on my bike or on a mountain somewhere than needing to pay liability that would wipe my stash).

But you didn't answer my question: Would you not purchase liability insurance (to include umbrella) at some mileage (even zero)?

terran

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Re: Why is carrying minimum car insurance such common advice?
« Reply #23 on: September 24, 2019, 09:55:28 AM »
One additional thing to consider: It is a basic tenet of Mustachianism to minimize driving to the extent possible. For example, I consider my current situation facepunchworthy, but when I compare my household miles driven per year to the average in my state, we're at about half the average (according to this site: https://www.carinsurance.com/Articles/average-miles-driven-per-year-by-state.aspx). Many others on this site drive far less than I do. At what point do the costs of liability insurance start outweighing the risks of not having insurance? 10,000 miles per year? 1,000 miles per year? 100 miles per year?

Always carry strong liability insurance. All it takes is one crash where you're at fault and uninsured/underinsured to completely wipe out your finances. You should be able to find a company that will charge you less if you drive less.

We have liability-only coverage. Our car is a fraction of a percent of our net worth. We don't need to insure the object. A crash could easily expose us to all of our net worth in legal liability. We do need to insure that.

Always is a very strong word, though I agree that one is taking a small (albeit very consequential) risk if one doesn't insure. Perhaps when I am officially FI I will see the light and insure, though I am a risk-taker by nature (I probably have a much better chance of dying on my bike or on a mountain somewhere than needing to pay liability that would wipe my stash).

But you didn't answer my question: Would you not purchase liability insurance (to include umbrella) at some mileage (even zero)?

Remember that if you injure someone they can take future earnings, not just what you have now.

And to answer your question, no, there is no point at which I would both have auto insurance and drop high liability limits. If I drove little enough I might not have a car and walk/bike/transit/uber everywhere I go, but if I have a car I'll always (yes, always) have high liability limits

The possible only exception I can see to "always" is if you're dirt poor and expect to always be dirt poor. Lawyers know they can't get blood from a stone, so they're not going to squeeze you. This doesn't apply to anyone on this forum.

teltic

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Re: Why is carrying minimum car insurance such common advice?
« Reply #24 on: September 25, 2019, 10:38:10 AM »
Quote
The possible only exception I can see to "always" is if you're dirt poor and expect to always be dirt poor. Lawyers know they can't get blood from a stone, so they're not going to squeeze you. This doesn't apply to anyone on this forum.

@terran
How would the lawyer know your networth in an event of a major car crash?  Assuming I live in a frugal (middle/lower middle income neighborhood), with frugal cars (cars under $10k), with no job (due to FIRE, but not sure how he'd know).  Why would he think/know I have $1M stashed away with a paid off house?

terran

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Re: Why is carrying minimum car insurance such common advice?
« Reply #25 on: September 25, 2019, 11:02:09 AM »
Quote
The possible only exception I can see to "always" is if you're dirt poor and expect to always be dirt poor. Lawyers know they can't get blood from a stone, so they're not going to squeeze you. This doesn't apply to anyone on this forum.

@terran
How would the lawyer know your networth in an event of a major car crash?  Assuming I live in a frugal (middle/lower middle income neighborhood), with frugal cars (cars under $10k), with no job (due to FIRE, but not sure how he'd know).  Why would he think/know I have $1M stashed away with a paid off house?

I didn't say they wouldn't sue you, I said they wouldn't squeeze you. Once they find out they're not going to get anything from you or your insurance they'll probably stop trying to collect since it's not worth their time. Or worst case, you file for bankruptcy since you have nothing to lose (although, apparently not in negligence cases like drunk driving).