Car insurance deductibles

[3kids4me]

Do you have a high deductible on your car insurance to save fees and because you never use the insurance?

If so, would you recommend lowering it when you have a new driving teenager in the house? Or is it better just to keep it high, assuming that you will try not to use the insurance if at all possible since it makes your premium go up so much?

Advice appreciated...thanks!

 

[Dave M]

There is no single answer, Sharon.

A lot depends on your tolerance and the affordability of risk. Certainly, if there's an accident, you'll wish you had a lower deductible. If there's no accident, you'll wish you had saved the premium and gone with a higher deductible.

Remember, insurance companies are in it to make money. Thus, they are betting that the additional amount you pay for that lower deductible will wind up in their pocket because (statistically) it's a good bet that your son won't have an accident during the policy year.

 

[tmartin1]

We're going through the same decision ourselves. I called our insurance company yesterday to find out how much it would cost to insure our DD who will be 16 in July. Yikes! I'm glad I only have one child.

The difference between a $250 deductible and a $1000 deductible is approximately $700 per year. Right now, I'm leaning towards the larger deductible.

Theresa

 

[chellej]

My kids:

Ds 21 - one accident
DD - 18 one accident
DS 16 - Just got his license.

Each child has their own car & with the boys since they cars are older (92 firebird, 95 mustang)we just carry liability on them. They know if they are at fault they will have to get their car fixed.

DD has a 04 Hundai and it has full coverage. We raised our deductibles to $750.

Our car insurance is still $450/month.

If your son does not have his own vehicle, some companies will rate him on the highest priced car, some will not. We just switched from Geico because they did not rate my youngest until I told them he was driving to work 3 days per week. If they are just driving for pleasure and not to and from school, the rate was much lower.

You will get credit if he is a b student or better and if he has taken a defensive driver class (This is in addition to drivers ed class)

No matter how you do it, car insurance for kids is a nightmare

 

[gorevs9]

Do you have a high deductible on your car insurance to save fees and because you never use the insurance?

If so, would you recommend lowering it when you have a new driving teenager in the house? Or is it better just to keep it high, assuming that you will try not to use the insurance if at all possible since it makes your premium go up so much?

I assume you are talking about collision coverage. If you do not have a car loan AND/OR the value of the car is not too high, I would recommend dropping the collision coverage altogether . Use the money to pay for extra liability and maybe an umbrella policy.

When my second daughter started driving the premium for collision alone was over $1000/year and this was to insure a car that had a book value of maybe $8,000. I'd be paying $1000 to insure $8000. My local agent advised me to drop collision if the premium is greater than 10% of the value of the car. The rationale was that if the car was wrecked, the loan rate to replace or fix the car would be less than the collision premiums (i.e. I could borrow $8000 for less than $1000/year interest).
Of course, the accident comes the day after you drop the collision coverage.

Another issue is if you put in a claim for collision, your premiums will probably increase over the next few years. Several years ago, my wife backed into a stone wall and sustained over $1000 in damages. My agent told me that because the claim would be on my record for the next three years, my rate would go up a couple hundred $$ a year. It seemed like I was going to pay them back anyway.

 

[3kids4me]

Thanks. This is to insure him on our car. He won't have his own at this point.

Sharon

 

[Cathy in Boston]

If I could just give a little advice...something I tell all of my friends. While it often makes sense to go with a higher deductible on the physical damage coverages (comprehensive and collision), what doesn't make sense is to try to save some money by going with low liability limits. The difference in cost to go with higher limits is usually not very much, and the protection is worth every penny. I always recommend a minimum of $250,000 per accident/$500,000 per occurrence for optional bodily injury and a minimum of $100,000 for property damage liability (if you are in an accident and damage someone's Mercedes, $5,000 in coverage is not going to get you very far).

Yes, I work in the insurance industry...how could you tell.

 

[JimJ]

We're going through the same decision ourselves. I called our insurance company yesterday to find out how much it would cost to insure our DD who will be 16 in July. Yikes! I'm glad I only have one child.

The difference between a $250 deductible and a $1000 deductible is approximately $700 per year. Right now, I'm leaning towards the larger deductible.

Theresa

You would then be paying $700 per year for the added $750 of coverage? How many accidents do you plan to have?

 

[JimJ]

Sharon: Check with insurance company to see what the rate differences are between the various deductibles. Then do the math. Low deductibles generally are quite high for the difference in coverage. Unless you plan to have frequent accidents, I don't think low deductibles are worth it. (Plus, frequent accidents will lead to the insurance company dropping you anyway).

It also depends on your risk tolerance. If you had say $250 vs. $1,000 deductible, would the added $750 out-of pocket really hamper your life style?

 

[Barbeque]

My wife has been in the insurance business. Here is what I really understand Insure yourself for at least as much as you would anyone else. Have your non insured and under insured coverage as high as you can. That coverage is fairly inexpensive. With so many illegal aliens in California with no insurance you cannot afford not to, an d to cover yourself with people with low limits of liability if you are really hurt in an accident and the other party is at fault. I would raise the deductibles if you can afford the loss. The cheap deductibles they really charge you for. If you have a very minor accident with no injuries pay the damages and fix your car don't turn it in your rates will go up.

 

[dougp26364]

My opinion is to accept the highest deductable you can afford to pay without creating a financial hardship if/when an accident or claim occurs. Remember, you can always be the victim of a hit and run, hit by an uninsured driver or have a comprehensive claim such as hitting an animal, hail or wind damage. I had a client once who had the wind rip a shed door our of his hands and it put a nasty scratch down a friends car door. Since it was an act of God (wind taking the door vs him swinging the door open under his own power), the homeowners policy did not pay. It was up to the comprehensive portion of his friends own car insurance to pay the claim.

So, my opinion has always been to go as high as your comfortable paying at any given moment. For some that's $100 but others can easily afford $1,000.

 

[short]

Uninsured driver insurance.

My wife has been in the insurance business. Here is what I really understand Insure yourself for at least as much as you would anyone else. Have your non insured and under insured coverage as high as you can. That coverage is fairly inexpensive. With so many illegal aliens in California with no insurance you cannot afford not to, an d to cover yourself with people with low limits of liability if you are really hurt in an accident and the other party is at fault. I would raise the deductibles if you can afford the loss. The cheap deductibles they really charge you for. If you have a very minor accident with no injuries pay the damages and fix your car don't turn it in your rates will go up.

I had an interesting discussion with my agent a few days ago. I was asking why we had Uninsured motorist deductable waiver on 2 cars and not on the 2 others and what exactly it covered.

He said industry stats are that 32 percent of drivers in Ventura County and 41 percent of drivers in Los Angeles County are driving uninsured. He is seeing these ratios in his client claims. So if we are in an accident, there is a 1/3 chance the other driver will have no insurance.

California use to put people in jail for driving without insurance but I guess that got to expensive.

Short

 

[tmartin1]

You would then be paying $700 per year for the added $750 of coverage? How many accidents do you plan to have?

Yes - crazy isn't it. That's why we're probably going with the higher deductible. The only reason I say 'probably' is that I haven't received the paperwork in the mail yet and I have to look at ALL the numbers for all 3 cars. So, until I see it all in writing, I don't know how it all plays out or if the telephone quote was 100% on target.

Theresa