Car Insurance?

flutingaroundflutingaround Posts: 87Member
edited September 2012 in Personal Finance
I have a 2004 Subaru Impreza in fair condition (mechanically awesome, cosmetically not awesome) and my insurance agent says that I should continue to keep full coverage on the car. At what point would you drop coverage on an aging car? I'm trying to find ways to help m budget so I can pay off debt faster...
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Comments

  • blackdiamondblackdiamond Posts: 2,307Member, Beta Tester
    In my experience the difference in cost is very little. Fixing cars is much cheaper than fixing people and that is the required coverage. Can you afford to replace your car outright?
  • litterbuglitterbug Posts: 3,636Member, Beta Tester
    I have a 2004 Subaru Impreza in fair condition (mechanically awesome, cosmetically not awesome) and my insurance agent says that I should continue to keep full coverage on the car. At what point would you drop coverage on an aging car? I'm trying to find ways to help m budget so I can pay off debt faster...
    There's a lot to know about car insurance, but here's an article describing the different kind of coverage you can get. http://www.iii.org/articles/what-is-covered-by-a-basic-auto-policy.html. Here's another one talking about how to make car insurance decisions. http://www.smartmoney.com/plan/insurance/how-to-buy-car-insurance-1307572316374/

    The bottom line is that you owe no loyalty to your insurance agent. If they give you the best deal you can get, or close enough to it to be worth sticking with someone you know, that's fine, but you should educate yourself and find out what your options are. Most of us pay a ton more for insurance than we should. I'm paying a little more than I might elsewhere because Progressive has been extraordinarily easy to deal with and helpful in tight spots, but if I checked around and found I could save significant dollars on insurance I'd jump ship in a minute.
  • bradbrad Posts: 2,192Member
    I think the main thing you can cut out with an older car is collision (which covers the cost of repairing your car in case of a collision). In most places the big-ticket coverage is mandatory (damage to people, liability, etc.) but if your car isn't worth much and you get into an accident the cost of repairing the car might be more than the car is worth. That's where dropping collision coverage can save you in terms of lowering your premium. Of course this means you'll have to cover any collision-related repair costs out of your own pocket. Even if the cost of repair is more than the car is worth, you might decide to do the repair; a Subaru should be able to last 250,000 miles or more.

    You can also save on your premium by taking a higher deductible. If your deductibe is currently $100, consider raising it to $500. It's a gamble, because it means you'll have to pay $500 toward any repairs, but depending on how much it saves you in annual premium costs it could be worth it.
  • smallLifesmallLife Posts: 322Member
    Also make sure that you aren't "insuring" anything unnecessary. Medical coverage, rental car, tow truck, any special promotions you wouldn't otherwise think about, etc. are all extras that just line the pockets of insurance companies. I personally see insurance as something that prevents me from having to declare bankruptcy in case of an accident, not something to cover every bump and bruise in my driving career. In light of this my deductible is $1000 and it only covers comprehensive, collision, and uninsured motorist. Once I am reasonably car-free (working my way there over the next two years, possibly sooner since a scooter can probably suit my needs) I will drop the comprehensive. The biggest thing you can do to reduce your rates is not get any tickets or accidents - so drive the speed limit and give yourself plenty of space.
  • flutingaroundflutingaround Posts: 87Member
    In my experience the difference in cost is very little. Fixing cars is much cheaper than fixing people and that is the required coverage. Can you afford to replace your car outright?


    According to Kelly Blue Book it is between Fair and Good condition- Making it about $4500 to replace. At this time I don't have the cash to replace it- I would have to finance a replacement. It has 125,000 miles on it, but I anticipate being about to drive it to 250,000 miles.
  • arteegeearteegee Posts: 810Member
    Be careful of dropping collision insurance because you wouldn't have coverage if you should borrow a car or rent a car.
  • flutingaroundflutingaround Posts: 87Member
    Holy snykees...Just for giggles I got quotes from State Farm and Geico, and they are WAY less than what I pay with Allstate. I've been with Allstate my entire adult life. I had no idea they were taking me for a ride! Looks like I'll be making a switch when my current policy is up. Thanks for the help everyone.
  • bradbrad Posts: 2,192Member
    For rentals and borrowing, you need to look carefully at your policy to see exactly what is covered. I once asked my insurance provider if we were covered for a car rental in France and they said yes, but I asked the same question a year later and they said no, so I looked at my policy and sure enough overseas rentals were not covered. I switched to another insurance provider this year that provides coverage for rentals anywhere in the world, which is actually a huge savings. We rented a car in France and I don't have a credit card that provides auto insurance for rentals, so we had to pay through the rental agency -- it cost more than $400 for 10 days. I only pay $700 for an entire YEAR of car insurance at home.
  • arteegeearteegee Posts: 810Member
    I got a Geico quote and it was so far under all others that it makes me suspicious. Read alot of reviews on-line and they were pretty mixed so now I am just confused about what to do. There were good reviews from people that got into accidents but there were also many that accused them of bait and switch tactics, taking more money from their accts. for more than the original policy quote and folks having their rates hiked up every six months which is the longest they write a policy for. The other quotes I got were higher than I currently pay so I am thinking I have a good policy now (West Bend Mutual) and probably won't switch. I pay annually saving 5% and admin fees and get 5% back if there are no claims.
  • flutingaroundflutingaround Posts: 87Member
    artee gee wrote:
    I got a Geico quote and it was so far under all others that it makes me suspicious. Read alot of reviews on-line and they were pretty mixed so now I am just confused about what to do. There were good reviews from people that got into accidents but there were also many that accused them of bait and switch tactics, taking more money from their accts. for more than the original policy quote and folks having their rates hiked up every six months which is the longest they write a policy for. The other quotes I got were higher than I currently pay so I am thinking I have a good policy now (West Bend Mutual) and probably won't switch. I pay annually saving 5% and admin fees and get 5% back if there are no claims.


    I came across the same reviews for Geico, and apparently, if you get a ticket or have an accident, they will raise your prices too. I've been creating a list of potential companies to investigate:

    Geico
    State Farm
    Allstate
    Progressive
    AAA
    USAA
    Liberty Mutual
    Amica
    21st Century
    Mercury

    I'm also considering using one of Dave Ramsey's ELPs to help me decide. I had a major accident in a car rental on vacation in 2010, when I swerved to miss an animal. The car was totaled and I was medevaced. I was with Allstate and they did not increase my rates as a result of the accident.
  • WillWill Posts: 788Member, Beta Tester
    Holy snykees...Just for giggles I got quotes from State Farm and Geico, and they are WAY less than what I pay with Allstate. I've been with Allstate my entire adult life. I had no idea they were taking me for a ride! Looks like I'll be making a switch when my current policy is up. Thanks for the help everyone.

    If you belong to any groups or clubs, there are often "affinity" programs that get you even more discounts. As a college grad, my school had something set up with Liberty Mutual which saved me at least 10%, making them cheaper than anyone for a long time. Then, I joined the Sierra Club and got a mailer for a quote, and with the discount I got with The Hartford for paying for a full year, I saved even more. So keep shopping around, and check the ratings of the companies online.

    And you don't have to wait until your policy is up. You can switch ANY time you want, and anything you've paid that you haven't used will be prorated and refunded back to you.
  • litterbuglitterbug Posts: 3,636Member, Beta Tester
    Tip: Talk with a customer service rep and explain why you're leaving them. Many times they'll come up with a competitive offer. You have to watch them, though, because over time your risk might drop (depending on your age, neighborhood, etc.), and they might not drop your rates accordingly. That's why most financial sites I've seen recommend shopping insurance once a year. Typically a policy states which discounts were applied to your policy so you can make sure you're getting credit for being a safe driver, driving a highly-rated (for safety) car, parking in a garage, living in a good neighborhood, having a good credit score...

    Also, remember that in general it's the people with bad experiences who post reviews. I always read both negative and positive reviews carefully, because they often reveal whether the reviewer expected service which was far beyond the norm or even beyond their coverage or were surprised to even receive a check, either harassed or ignored or had a crush on customer service reps, or are just a little bit nuts. I filter the obvious ones out and pay more attention to reviews from those with cooler heads.
  • ErinElizabethErinElizabeth Posts: 44Member
    I want to second the recommendation to check around for better rates periodically. Last year I did that and ended up dropping our cost for two cars by over $800 a year while actually improving our coverage. When I called our then-current carrier the rep couldn't offer me a better rate and after verifying the coverage was less, said she wouldn't turn it down either.

    And there's no need to wait till end of current term, as stated earlier, they'll just credit you back the prorated amount. I'm due to check around again and while I have a hard time imagining I'll find a better deal than we currently have, that thought is what had me paying three times as much as I needed to be paying before.
  • blackdiamondblackdiamond Posts: 2,307Member, Beta Tester
    If you can get better rates now then switch now. You will get your premiums back. I recently switched from State Farm to Safeco and have much better coverage for about the same dollars. If you are in the great northwest, give EHL insurance a chance.
  • PatzerPatzer Posts: 3,793Member, Beta Tester
    Holy snykees...Just for giggles I got quotes from State Farm and Geico, and they are WAY less than what I pay with Allstate. I've been with Allstate my entire adult life. I had no idea they were taking me for a ride! Looks like I'll be making a switch when my current policy is up. Thanks for the help everyone.

    Everyone compares the premium rates, but that's not the most important thing about car insurance. The most important thing is, what happens if you have a claim?

    In my experience, State Farm claim management has been excellent. Since my rates are reasonable, I would not even consider changing to save $50 or $100 per year. In fact, many of the advertisements for low priced auto insurance claim I can save more than what I'm actually paying per year! That makes me think there are some real rip-off companies out there.

    Companies I would never consider, based on the claims handling when their policy holder was at fault:
    1. Liberty Mutual
    2. any company that advertises providing affordable coverage to high-risk drivers
    3. I'm fortunate that I haven't had all that many accidents, so the list is pretty short.

    Once you have an insurance company you're comfortable with, there are some things you can do to reduce cost. A common recommendation is to drop collision on an older car. I chose many years ago to raise my deductible from $250 to $1000. This saved me, at the time, about $100 every six months. Since my history is to have fewer than one accident in four years, that's a net savings to me.

    Of course, it is necessary to be prepared for meeting that deductible. To that end, I maintain an Unexpected Expenses category (conceptually like the DR baby e-fund) at a level of $2000. I can cover the deductible. Someone who is living paycheck to paycheck would be ill advised to accept a $1000 deductible. I've considered increasing this to a $2500 deductible. Once your car is worth less than the deductible, that's effectively like cancelling collision insurance. It may cost a little bit more to have the insurance with the high deductible than to not have it at all, but I can set up the high deductible when the car is new and not have to think about just when I should cancel collision, or adding collision back on a replacement vehicle.

    The last consideration is, what happens if your car is totaled? When you're driving an older but reliable car, the settlement will be at market value. There's a reason you're not selling that old Subaru on the market; you couldn't buy as good a replacement for what you could get for it. In like manner, if your car is totaled you will need to cover the difference between the settlement and what you need to pay for a replacement car. To that end, I have a Car Replacement category. If all goes as planned, that category will become fully funded in late 2017 and I'll replace my current car then. If some jerk with lapsed insurance runs a red light and totals my current car before then (this happened with the car my daughter was driving), I'll need to take money from the Unexpected Expenses and/or Car Replacement categories to supplement the insurance settlement when I get my replacement vehicle.

    I wish you well in finding affordable car insurance. Just remember, the premium you pay isn't the only cost you should be considering.

    Patzer
  • flutingaroundflutingaround Posts: 87Member
    Wow! Excellent advice everyone and Patzer. I did make a call to one of Dave's ELPs and he is a broker. He is shopping insurance for me. I was going nutto trying to do it on my own. Safeco is one of the companies he works with...so it may be the way I go.

    Patzer- II can go to the $1000 deductible and I plan on starting my car replacement fund next year after I finish baby step 2. I think my Subaru will last another 7 years. Hopefully that will be enough time for me to save for a "new" used car! I really appreciate that you took the time to explain about the deductible and possible replacement if my car is prematurely destroyed. :)
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