Auto insurance deductible

[phonzie]

Hi,
I'm debating whether I should increase my deductible to save money on my auto insurance.

My current policy - cost: $1244/yr - $250 deductible for comprehensive and $250 deductible for collision

If I increase to $1000 deductible for comprehensive and collision, the premium will decrease to $1008/yr

If I increase to $2000 deductible for comprehensive and collision, the premium will decrease to $948/yr

If I eliminate my comprehensive and collision coverage (just keep liability), the premium will decrease to $614/yr

My car is a 2001 Honda Accord sedan and is worth, per Kelley Blue Book, about $7000 to a private individual, or about $5700 trade in.

I've been driving for 17 years and have had 2 accidents (my fault each time). 1st accident was in 2004. Second was in 2009. I live in northern California.

Thank you for any advice.

[riverwed070707]

What's your current savings like? Can you afford a $2k deductible if something were to happen? How much longer do you plan to keep the car?

I tend to lean toward liability once the car passes the point where you're going to care about body dings/cosmetic damages but that's just me. We currently have an 06 and an 01 and still have full coverage on both becuase both are still in great mechanical and cosmetic shape and are valued at more than we can afford to replace.

[wolfy]

If you have 2k in the bank and can leave it there and not use it for anything else, then go for it. But if you plan to use the savings each month to build up to 2k I would say leave it the way it is or up it to 1k. You never know when that deductible would be needed and you would hate to have just spent it on something. The other question is do you have any kind of loan on it? If you have a loan on it some banks won't allow you to go higher than $500 or 1k deductible. So you need to check that. Otherwise, do what you are comfortable with.

[phonzie]

I'd like to drive the car as long as possible. I have enough in savings to buy a new car if needed. The car loan is paid off.

[cypher1]

I'd raise the deductible to 1000 (if you have 1k saved), and keep full coverage. If the vehicle was valued at under 5k then I'd lower to liability.

[cypher1]

I was just going to ask if you've been shopping around for different rates? It doesn't hurt to do that annually. Do you have a mortgage, and able to combine insurance for a discount? Just another thought.

[phonzie]

I just recently asked for a quote from another company, and the quote was twice as much as I'm paying right now. I have renter's insurance on top of my auto insurance from the same company, and I believe I get a discount because of that.

[bjl584]

I wouldn't increase it past a $1000 deductable. You would only save an extra $50 a year by going from 1000 to 2000. That a little savings for a lot of risk. Especially on a car that is still worth 7000.

[MonkeyMama]

I think it all just comes down to how much money you have in the bank.

Why pay for insurance you don't need? You have the $2k readily available - so I would probably choose that. Even if the savings is minimal. I always think as insurance as "catastrophic insurance." So even if it is a small amount, why insure non-catastrophes? To me it's like throwing money down the drain - but people justify it because it is "cheap."

When it comes to comprehensive/collission, I am more on the fence. There is still an element of "why buy insurance you don't need?" If losing the car in an accident would have no financial impact on you, then drop the extra coverage. However, consider risk. If you have a history of being "at fault" every 5 years, maybe you should lean towards keeping it a while longer. Cars tend to drop value rapidly, and it may be worth dropping extra insurance soon enough, if not right at the moment.

[Robert742]

Given your driving history, and if you do a fair amount of driving, I would keep collision, with a $1000 deductible. Most of your savings comes from Collision, so I would keep my comprehensive deductible at $250.

Forget the kelley blue book figure, your insurance company will look at comparable sales for a similar year,make,& model car, in similar condition prior to the loss, if you have a claim.

Subtract your collision deductible from the market value of your car, and decide if the collision premium is worth paying for the amount you would receive if you have a claim.

Comprehensive costs less for your age and type of vehicle, and it covers theft, fire, vandalism, etc. -- things which are more out of your control than damaging your car in an accident, so I like to keep it, even on older cars, and drop the collision.

If you do drop collision, be sure to add uninsured motorist property damage coverage, to have some coverage for damage to your car if it is hit by an uninsured motorist. It only costs a few dollars to have it.

I would also keep shopping. Checking with only 2 companies does not tell you if you are paying too much. You may have a great rate now, but I would confirm it by checking with a few more companies.

Definitely shop around again once the 2009 accident is over 3 years old.

[Brocksby]

Auto Insurance is made complementary for every vehicle owner and if you don't have auto insurance your are involved in breaking law and you can help for the charges.I think this a positive step as it will generate more business opportunities for more insurance companies and safety is guarantied.

[scot184]

Sounds like not the best deal...you should shop your premium with a few insurance companies first to see if someone can offer you your current coverage without raising your deductible...

[thefrugaltoad]

If you combine insurance policies: home, auto, and life with the same company you will get a discounted rate. I would also recommend a $500 deductible as the difference in savings with the $1000 might not be worth it.

[kalimaniac]

I like to keep my deductibles at 1K. Hopefully you won't be unlucky enough to get into a third accident--or perhaps a driving refresher course is in order.

[phonzie]

Thanks for all the advice. I decided to go to 1K on comprehensive and collision. When my last accident is 3 yrs old I'm definitely going to shop around.

[Frugal]

I don't know, but if I were you, I might consider looking around for quotes. We pay under $45/month for both of us. Neither of us has accidents or tickets, however. We have clean driving records. Have a 2007 and 1991 car.

Personally, I used to work in insurance at one time, and I know that people tend to try to raise the deductible to save money. Sometimes, though, when they come in after having an accident, they really wish they had not raised the deductible so high. I have not personally raised my deductible in a long time. We are good drivers, but you never know when someone else might hit you and even IF they are at fault, you could be on the hook with your deductible coming into play in some cases.

Better safe than sorry.

[zerodeductible]

To offset the risk of having to pay a high deductible - check out Zero Deductible. We offer deductible reimbursement plans that would pay your entire deductible amount in case of a covered claim. Pricing varies but a typical $1000 deductible plan would cost you approximately $80 per year.

[danieldroga]

Originally Posted by phonzie

Thanks for all the advice. I decided to go to 1K on comprehensive and collision. When my last accident is 3 yrs old I'm definitely going to shop around.

That's good enough though there is a better option to choose. Good luck on your future plans and don't hesitate to ask questions here.

[alamuomo]

X
Let's make this analysis. If you move to the $1008/yr premium and there occurs no accident for a year. You'll save $236 on your premium. But if there is an accident, your total cost is $264 higher than that of your present premium. This mean that, if you drive for 2 years without an accident you'll save $236 X 2, which equals $472, which is higher than the difference in total cost as stated above. Remember that the time difference between the two accidents you've had is 5 years. So I think you can save money moving to the $1008/yr premium.

[daynarankin]

That sounds like way too much. I think it’s time to start asking companies for free car insurance quotes. About a decade ago, I got tired of the ridiculous rates I was being charged and switched to the Hartford. Best decision ever. I got a great quote, and still get very reasonable insurance rates, full coverage, and quite a few discounts my prior insurance provider didn’t offer.