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.