$42 savings worth the change?

[all4money]

We have to renew our auto insurance this month. We currently have 2 vehicles with comp/collision on them with a $500 deductible. If we increase the deductible to $1000, the premium decreases by $42 per year.

The vehicles are a 2006 Toyota Rav4 and a 2003 Toyota Sienna... both are paid for and (knock on wood) we've had no accidents in them in the 5+ years we've had them. So, would it be worth increasing our deductible to save just $42 a year?

[LittleMsMom]

Do you have enough Emergency Fund Money in the bank to cover the full 2K? If you have enough money then YES if you make it 2 years without an accident on either car you made a savings.

I have had three cars TOTALLED due to no fault of my own (Hail, Wind, Storm damage). So You have to determine your risk level. But I Would not change it Until you have the $2,000 in the Emergency Fund that would be needed to fix both cars I would not increase the deductable.

[FHA Loan]

Just 2 years? How do you figure? If they raise their deductible by $500 to $1000, they save $42 PER YEAR on their premium... In two years they will have saved $84. So after three years, they've saved $126.

Say they have a wreck in the third year and their collision has to pay out... Yea, they saved $126 on premiums over the 3 years, but now they are paying out $1000 in deductible to get their car fixed ($500 MORE than they would have had to pay if they hadn't raised their deductible). So in this case they really loss $374 by lowering their deductible.

It will take 12 years of no accidents (12x$42=$504) for the savings in premiums to pay for the difference in deductible.

If you think you might have an accident anytime in the next 11 years where the damage to your car is more than $1000 (almost ALL wrecks, even at 10mph, generate at least $1000 in damages), I'd keep the $500 deductible and forego the savings.

Now if you're trying to decide whether to drop collision all together (since the cars are paid for) or keep it then that is a totally different outcome.

[disneysteve]

I wouldn't switch for that small of a savings. I'd want to see the difference made up a lot faster than 12 years, like maybe 2 or 3.

[MonkeyMama]

It depends.

1 - How accident prone are you and your family? (I am totally serious. We all know those people who get in accidents every few months, and we all know those who never dinged their car in a lifetime).

2 - Do you have ample savings in the bank for the higher deductible?

I understand why many people are saying it is not worth it, mathematically. BUT, if you don't need the insurance, why would you pay for it? Insurance odds are always stacked against you. Our general rule is to insure for catastrophe. (Not a $1000 repair bill).

I can attest that with a higher deductible, I don't fix every ding on my car. The savings could be more than $42/year, in that regard.

[chuckhughes]

40

any amount of change when you are in need is a help. i once was broke and with my change i collected 25 dollars dont trow away your pennies.

[all4money]

Hmmm... good discussion.

Yes, we have $2,000 available if we do need it to cover the deductibles. I did seriously think about canceling comp/collision altogether but haven't convinced myself just yet to do so. Maybe I can compromise and just drop the coverage on the Sienna (it has 110K miles on it and is worth less than the Rav) and keep the $500 deductible on the Rav...

Let's see in our 13 years of marriage, we've had 2 cars totaled but neither incident was our fault so nothing on our insurance. Other than that, nothing else major along the way so I guess we aren't too accident prone.

[LittleMsMom]

Just 2 years? How do you figure? If they raise their deductible by $500 to $1000, they save $42 PER YEAR on their premium... In two years they will have saved $84. So after three years, they've saved $126.

I am sorry I read that to say $42 per MONTH savings not per YEAR.

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[all4money]

Ok, I ended up getting quotes from Geico and Progressive. For the same coverage amounts (dropping comp/collision on the older vehicle but keeping it at $500 deductible on the newer one), these are the results:

Current local insurance company = $368.00
Geico = $340.63
Progressive = $396.27

I went ahead and chose to go with Geico. This will give me a savings of almost $55 a year from my current insurance company and dropping the comp/collision on the older vehicle will save me almost $181 per year. DH and I thought it was a chance we should take, dropping the comp/collision on the van to save the $181.

We've had insurance for many years with Progressive and then changed to our local carrier 5 years ago. Both companies have been great to work with. We've never been with Geico before but I'm sure all will go smoothly with them. I'm quite impressed so far... I did get the quote online and chose to pay the policy online... got a phone call from them within 5 minutes to confirm some info and voila, I've got myself an insurance policy with them now.

Can I just let my current insurance run out or do I have to call the agent to let him know that I need to cancel? The expiration date is 6/20/10 and I had the policy with Geico start on 6/20/10 so there wouldn't be a lapse in coverage. I just hate calling to cancel things because before you know it, they are trying every trick in the book to keep you as a customer... so it would be much 'easier' for me to just not pay the renewal and let it run out...