Insurance advise for me

The numbers used are examples, so before you make any changes you should consult your insurance professional and/or someone with experience in these matters who can give you answers detailed to your specific situation.

Renters Insurance is a HUGE bargain, might not even cost anything.

Renters insurance covers quite a few things, including:

• Coverage for your personal content, even if it’s not in your home (eg: items in your car. Certain limits apply for traveling and storage). I typically see this coverage at 10k+
• Coverage if you are temporarily displaced,( eg: you need to stay at a hotel while your house is being repaired for smoke damage, money to replace lost clothes, increased food expenses because you’re eating out every day since you don’t have a stove, etc.) I typically see this coverage at 30% the above number
• Coverage for liability (eg: someone falls in your apartment and breaks their leg, sues you for negligence). I typically see this at 300k
• Coverage for your defense costs (eg: lawyer fees, small allowance if you need to miss work to attend court hearings, etc.) This is included.

And how much does this coverage cost (including the numbers I used above)? Usually under $200; I typically see 150, but I have seen it go as low as 90. PLUS, if you bundle your renters and auto, sometimes the discount on auto will cover the renters (eg:$200 savings on auto, renters cost 150, net savings: 50.) Call your auto insurance, ask if they have renters. If it’s too much, say thank you and call the next agency.

What would a worst case scenario look like? Well, try /r/legaladvice[1] , browse around for a bit. For the lazy, imagine you accidentally start a small house fire while cooking. It damages a few thousand dollars’ worth of your stuff, plus you have to live in a hotel while it’s being repaired, and your landlord is going after you for damages because he has to pay for the repairs. If you don’t have renters insurance, you’ll be paying all of that out of pocket. Oh, but if you DO have renters insurance? You’re paying the deductible (typically 250 or 500), and then letting your claims adjuster deal with everything else. Have to take time off work to go to court to prove you’re not negligent? They have you covered.

Higher Deductibles will save you more money, especially over the long run

General rule: At LEAST $500 deductible on your auto, preferably $1k. For homeowners insurance, it’s best to go with at LEAST $1k, preferably 2.5k or even 5k. Renters can get away with 250 or 500, honestly.

Why?

The difference is usually several hundred a year, and you pay the deductible before the insurance pays anything.

I go into this a little more later, but say for example your insurance is 1500 a year with a 1k deductible, and 900 a year with a 2.5k. After 4 years, with a 1k deductible, you’ve paid 6000 to the insurance company, and then you’ll have to pay another 1k in the event of a claim. After 4 years with a 2.5 deductible, you’ve paid 3600 to the insurance company, and put aside 2400 that would have gone to the insurance company, so basically covered your deductible. One more year, you can use the $600 you’ve saved to cover the deductible with $500 additional savings to do whatever you’d like.

Insurance should only be used in an emergency/making claims will increase your rates

This is the one that gets people the most. You pay 1500 a year for insurance, you’ve been paying the last ten years, so why shouldn’t you make a claim when you’ve already paid then 15k? Because it’s going to raise your rates.

Why?

If you don’t make any claims, you’re put in a group, “unlikely to make a claim”. Because you’re in that group, you get more favorable rates. If you make a claim, you automatically switch to a different group, “likely to make a claim.” Because you’re in this group, you’ll get less favorable rates. On auto, it will last for 3 years; on home, five. It doesn’t matter if you haven’t made a claim in your entire LIFE up until this point; as far as the insurance company can see if, you’ve made a claim and will be much more likely to make another.

For example: Let’s say you have a 1k deductible. Someone breaks into your car, steals your purse worth 1500. Personal property is covered by your home/renters, so if you make a claim your home will pay out $500 (cost of loss-deductible). They now see you as riskier, so they will increase your rates. Maybe $300 a year for the next 5 years; you’ll pay $1500 over the next five years, plus you’ve already paid the $1000 deductible, so now you’ve paid $2500 for a $1500 purse. In this case, it will cost you less to just buy a new purse out of pocket.

On the other hand, if you have a kitchen fire that does $30k in damage? Yeah, make a claim on that one.

Most vehicles don’t need “full coverage”

Unless A) Your vehicle is financed, then it’s required by your financing company, or B) Your vehicle is less than 10 years old, then your vehicle will pay out more.

Why?

• Full coverage isn’t an industry regulated term. Professionally, it means nothing. It usually includes collision and comprehensive coverage; some companies will also throw in towing, glass, and rental. If you ask for full coverage, you could be getting anything.
• Your policy will typically only pay out collision if you’re at fault. If the other driver is at fault, their insurance will pay out. Comprehensive does cover more, so you can get away with having comprehensive (vandalism, theft, tree falls, hit deer) but no collision (you hit object)
• We will only pay out what the vehicle is worth. Not what it costs to get a new vehicle of this type, not what it costs to get a used vehicle of this type. Doesn’t matter if you paid $35k for the vehicle 10 years ago, doesn’t matter if it costs $15k ro replace it today, we’re only going to pay out the Actual Cash Value, and it typically isn’t 15/35k on a 10 year old vehicle (Much more common is less than 5k)
• You actually end up paying the company more than it would pay you in the event of a claim, because “full coverage” costs more than liability only.

For example:

Let’s say you have a buy a vehicle in 2001 for $20k. ACV is 3k. Your insurance is 1000 liability only, 1500 with collision and comprehensive, with a 1k deductible. Over the course of 4 years here’s what your insurance totals will look like:

	Liability only	Full coverage
1	1000	1500 (500 extra)
2	2000	3000 (1k extra)
3	3000	4500 (1.5k extra)
4	4000	7000 (2k extra).

Liability is what you have to pay anyways, so unfortunately there’s not a lot you can do to get around that. For the collision and comp, you’ve paid out 2k extra over the years. If you have an accident right now, the ACV is 3k, minus deductible (in this case 1k). So the most they’ll pay out is 2k, which is the amount you’ve paid them, so you break even. Ever year after that that you don’t have an accident, you’re paying them money that you will never get.

The exact amounts vary, which is why I have the general rules A and B above. If you’re not entirely sure, find out the rough value of what your vehicle is worth. Price liability only coverage (that’s coverage if you hit someone), and liability+ collision and comprehensive coverage (coverage if you hit someone, and also for your own vehicle). Take the rough value of your vehicle, subtract your deductible, this is X. Then take (the price of your quote with collision and comprehensive) and subtract (the price of your quote with liability only). This is Y. X divided by Y is how long it will take you to “break even” if you were to have an accident (although this is obviously not the goal).

Insurance professional here with some tips to save money on your insurance 

We will only pay out what the vehicle is worth. Not what it costs to get a new vehicle of this type, not what it costs to get a used vehicle of this type. Doesn’t matter if you paid $35k for the vehicle 10 years ago, doesn’t matter if it costs $15k ro replace it today, we’re only going to pay out the Actual Cash Value, and it typically isn’t 15/35k on a 10 year old vehicle (Much more common is less than 5k)

Interesting because GIECO paid us "Fair Market Value" on our car, basically just prices on the exact same car from dealers around us. And since dealers always overprice cars we got good value (almost what we paid for it two years earlier).

Also what about uninsured motorist coverage? There are a lot of illegal immigrants who drive without insurance in my area, and have very little money. What would you recommend for that?

Yeah the offer GIECO made us was about 3k more than we were expecting. And it was almost the same amount we bought the car for 2 years earlier, it was crazy. It's because they don't factor in negotiating prices down from the dealers list price when they do fair market value, I think.

I'd bet two things are at play. The insurance adjuster has a lot of work to do and doesn't want to argue too much or work too hard on any single claim. Second, if you're not at fault, its the other company paying, so fuck them.

I can vouch for the adjuster being overworked, when I was involved in a T-bone accident, my Mercedes was totaled out. When the adjuster called me with the initial offer that was 8K(!) over KBB, I took that in a heartbeat.

I later found out that the adjuster from Farmers used local dealer prices when pulling the quote, and could only find cars which were heavily optioned out that had similar mileage to mine. I got the ACV of a heavily optioned out car on a car that was pretty much base with virtually no options. Price difference between a fully loaded car and base was easily over 15K when new.

Car was KBB'd around 32K, received a check for 40K and change. I paid 47K and change for the car brand new, car was 3 years old and had 29K miles when totaled.

EDIT - Depending on the company you use for insurance, it's usually a good idea to ask the adjuster to take into consideration the market value of your car local to you. The worse they can say is no, I asked my adjuster when I first met him before he gave me the initial quote.

KBB is about list prices. Cars don't necessarily sell at the list price. They often don't. If you want transaction prices, you look at something like Edmunds.

 

kbb is about fair market value. but kbb is not what you would buy the same car at the dealer for which is retail. thats probably what he meant. they have to pay you fair market value. also, when you're hit and you don't go around saying your neck hurts they usually want to pay out quickly and have you sign a full release so you don't get any bright ideas. plus if you're not happy with the payout and you lawyer up it start chewing through the legal fees.

Seriously, coming from someone who's been in/around the auto sales industry my entire life, you should never pay close to retail for any car. Personally, I have/will never pay more than private party when buying from a dealership. That's not always possible if you want a specific car, but it's always possible if you're open to shopping for a long time.

In my case, I shopped for my mazdaspeed for 8 months before I finally bought one. I purchased a 1 owner 1 year old with about 10k miles for $1500 less than KBB private seller. I got lucky because they didn't list it with the tech package which is a $2k option.

If you're buying a new car, there is enough research available on the internet that you should know the exact dollar value that you should pay for the car.

Go to a credit union. If you have good credit. Typically, they will loan based off of the retail price plus the extras. If you get a good deal on the car (also depends on how much you spend) you shouldn't have a problem. I paid $20k for my car, but financed $25k. Also, a lot of places will give you a blank check good for up to a certain amount as long as the car is within a certain number of years old.

Negotiate:

Price of the vehicle you want

Price of the trade in

financing if necessary

Do them in that order, completely separate from each other. This keeps them from giving you $500 more for your trade in, but adding $500 more to the purchase price of the car so that you think you're getting a better deal.

You just got a good deal when you bought your car. The software that they use reviews cars within 75-150 miles of your ZIP Code, they then compare options and pricing to come up with the value of your vehicle. http://www.cccis.com/insurance-carriers/evaluate-review/valuation/ccc-one-valuation-private-passenger-vehicle/[1]

They add taxes and fees on top of the value. It's actually called the actual cash value and the report is compiled by either CCC or JD Power depending on which estimating software they use. I find it to be very accurate. The additional taxes and fees are supposed to cover what the dealer will charge you when you go buy a new car.

Insurance adjuster for a very prominent carrier. OP is wrong about ACV. You should be able to purchase a car similar to what you had based off your total loss payout since the whole essence of this is to pay the fair market value or the going rate. In my experience the total loss payout are pretty generous as well and are generally more than KBB. I often pay $1000-$3000 for old 15-20 year old beaters that the insured had collision on for some reason...

I don't work in insurance but as a Finance manage I have seen plenty of totaled cars. 90% of the totals I experience still have a loan and unless a 20% down payment was used nobody breaks even. I know, not the point, but damn it people get Gap insurance if you have a loan and put minimal money down. It's Cheap!

As for KBB their values are trash, no consistency across the board. I'm still shocked after years in the business that it is used so heavily. Many places don't even report the sale price as public information, so KBB is never accurate. Even for private party sales most people lie when reporting to DMV for taxes. This way they pay less while committing fraud against the state.