Reducing Expenses: Car Insurance
Wednesday, November 4th, 2009If you are lucky enough to own one or more vehicles, you know that they come with a significant cost called car insurance. Now if your car is ten years old, you probably don’t need collision insurance, as the collision insurance is very expensive, and the insurance company will only pay out “book” value should you hit a tree and total the car. Book value of a vehicle can be found at:
among others. Now I am going to throw out a totally arbitrary number. If you are paying more than 10% of your car’s value for collision insurance each year, you are probably paying too much. Either cancel it, or find another insurance company. Keep in mind, if you have a loan out on the vehicle, you cannot remove collision insurance.
This brings us to our next discussion. For car insurance, you should shop around. There are 9,450,000 pages on the internet that contain the phrase Cheap Car Insurance!! There are many companies offering inexpensive, if I can use that word, car insurance, and it pays to shop around. For example, Geico offers below market rates and has superior service when you do have an accident. Now I am not in the business of recommending specific car insurance companies so you will need to do your own shopping. I would only caution you to do your homework.
We had a 9 year old car that, years ago, was insured by a company at the time called ITT Something- or- other. When my wife was in an accident, not her fault, ITT Something-or-other wanted to deduct from book value of the car because the paint was “weathered”. I said to them, it’s a 9 year old car, you would expect the paint to be weathered, no?
They simply would not agree to give us book value for the vehicle, even though it had extremely low mileage. When they had it towed away as a total wreck, I told them, bring it back, that I’m not going to settle for what they wanted to give us. Their reaction?
They returned the unmovable car, and dropped it in the street in front of our house 2 ½ feet from the curb!! Can you believe that, you just can’t make this stuff up?
It was like we upset them unreasonably or something for not settling. So we sold it to a salvage company for almost as much as ITT Something-or-other was offering us, and got to take the new tires off and battery out to boot!!
We should have gone after them in court, especially because my wife was physically hurt in the accident, but it just wasn’t worth it. You see, the State of New Jersey has a law that says basically, unless you were permanently and significantly disfigured, you are prevented from suing for pain and suffering.
Needless to say, we immediately changed insurance companies. By the way, I forgot to mention that that accident was our first in over 17 years with the same company, and was not my wife’s fault. It could be a college level lesson on how to not treat a long term customer.
My point is, the lowest rate does not automatically mean the best service, so do your homework. There are many sites on the internet that display complaints about companies like ScrewedCentral, and planetfeedback. Even the Better Business Bureau has information about companies and complaints.
In spite of the horrors I just presented, car insurance is ripe for research for reducing your expenses.
You could switch companies, or even adjust deductibles, which reduces the premium. Keep in mind that if you have a loan out on the vehicle, your loan paperwork, oh that damn bank again, controls the minimum deductable which is usually $500. If you can raise the deductable, say from $500 to $1,000, you increase your personal risk when you get into an accident. You will be required to pay the first $1,000 of any damage. However, your premium will go down. If you don’t have a loan on the car, you can do that. You see, money goes to money?
Another way to lower your premiums is to not have accidents!! The more you file claims, the higher your premiums will be. Never mind the fact that you purchase insurance so that you don’t have to personally cover a loss in an accident, and you don’t have to worry about the cost of an accident if you have one. If you use it, you will pay more. Now that makes perfect sense, doesn’t it?
One last thought. Many auto insurance companies are also in the homeowners insurance and life insurance markets. It is possible to reduce your rate for car insurance, by bundling it with some of these other services. Consider it, and seek quotes.
Do your homework and go for it! You’ll lose all debt in no time!!