How to save on car insurance
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Here’s an interesting point from the excellent “How to Survive Without a Salary“: you may not need as much auto insurance as you are paying for. The author, Charles Long, makes an argument a page and a half long on the topic, which I’ll basically summarize this way: you should absolutely have liability insurance, but other kinds might require a long, hard look at the value of your vehicle as well as the cost of insurance. That’s not really anything new, but I liked this paragraph immensely; he’s addressing those who are skeptical about partially self-insuring.
Still in doubt? Look at it this way. Insurance companies profit by the statistical certainty that the average driver, in his lifetime, will pay more in premiums than he will collect through claims. If you are an average driver with an average car, you can put the equivalent of the insurance premium into a bank account or private investment. You can have an average number of accidents, pay for them yourself, and still be a head by the margin of the insurance company’s prfit. With a cheaper car and better than average safety habits, you can make even more than the company. In fact, you are an insurance company—with a single client. By all means insure against the total calamity of a big liability claim, but the rest you can do yourself.
I’m going to ponder this some more. I think the fact that we’re making payments on a car means we have to insure that vehicle pretty thoroughly, but our second car could be replaced for a fairly minimal amount, so it may make more sense to self-insure.
Action step: consider your own vehicle. Would partial self-insuring make sense for you?