Car Insurance Thoughts – Reviewing Deductible and Coverage Levels

I currently own a very reliable 1995 Nissan outright (no loan), and just got a my semi-annual bill from State Farm for $450. My insurance is pretty reasonable, now that I am over 25 and married, my last accident was over 8 years ago, and my car ain’t worth much. The question is, should change my deductibles, or even drop collision and/or comprehensive comepletely? I stopped by my local agent to ask. That’s one thing I like about State Farm – whenever I want, I can drop by and bug them with questions. That, and I got my parents’ 20-year history with them extended to me. Sweet. These and other reasons are why I am not shopping around for other insurance companies. I did that a year ago, and State Farm beat them out by hundreds of dollars, despite what that talking reptile on tv says.

First, after reading up, I made sure that I had all the discounts comin’ to me. I had the long-term customer discount, the “good driver” discount, a discount for the safety devices on my car, and also the “drives less than 7,500 miles a year” discount (which I do).

My current comprehensive deductible is $100. Raising it to $500 would only save me about $25/year, and eliminating it completely would save me $140/year. Hmmm… I park outside, in an urban neighborhood, so theft/vandalism is more likely. And if I make a claim, it can’t raise my premiums. Tough one. My car’s replacement value from Kelley Blue Book is about $5,000. I’ll have to think about this some more.

My current collision deductible is $500. Raising it to $1,000 would save me $100/year, and eliminating it would save $240/yr. Making a collision claim would raise my rates (how much I don’t know). I’m going to make the deductible $1,000 for now.

My current liability coverage limits are 50k/100k/50k. From my research, this is just too low. If I somehow cause an accident, the medical costs for the people involved could easily exceed $100,000. After that, they can come after my personal assets and even garnish my wages. Raising the limits to 250/500/100 will cost $100 per year. I am willing to pay that for adequate coverage in this sue-happy society.

If I drop my comprehensive and collision coverage completely, I will save $380/year. Let’s say hypothetically I get in an accident in 5 years and someone breaks in as well. If I kept my current coverage, I would pay $1,100 in deductibles, and my insurance would go up. If I drop everything, I will have saved $1900, but will have to pay out-of-pocket. If I lose the car completely, say by then it’s worth $3000, I will be out a net $1100. I broke even! Not too bad, but with my luck I’ll get in an accident the second I step out of the insurance office after cancelling my coverage. Sigh.

Comments

  1. Jonathan,
    Don’t forget to check insurers like GEICO and Mercury. They’re cheap. Of course there’s life insurance, which I know nothing about.

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