Car Insurance

[hyronomus4]

As I'm preparing to leave my job and move back into poverty to be a grad student I'm looking at ways to cut costs from my monthly budget.  Since I'm moving, I'll be re-doing my car insurance policy anyway and I'm trying to make it more reasonable.  The people who have given me quotes at the insurance companies are giving me advice but I'm also aware they're trying to make money.  My car is a little two door 2008 with low(ish) miles.  So, it's not new but it still has some value.  My question is, what can I actually drop that won't be a huge mistake?  Collision? Comprehensive?  Property damage?

[TakeruK]

I found one pretty good way to save money with insurance and that is to bundle a lot of your insurances together. For example, the place I rent from requires us to have renter's insurance so I get renter's and car insurance from the same people. Then, I get the bare minimum in liability for both renter's and car insurance and instead add an umbrella personal liability plan (which would cover me for liability in both cases). Having 3 insurance plans provides a substantial discount on all 3 plans.

If you already are doing something like that though, then another thing you can consider is instead of dropping some coverage completely (keep in mind that some states will require certain coverage), you can just raise your deductibles. If you are a good driver, then it's a good idea to have higher collision deductibles. It may vary from place to place, but if you are deemed not at fault for a collision, you usually do not have to pay the collision deductible. Also, the annual amount saved for a higher deductible may be significant. For example, I find that the difference between a $500 and a $1000 deductible is often around $300-$400 per year. This means that if you go for the $1000 deductible, you will begin saving money after 1.5 years (put that money in a savings account in case you do need the deductible). This is only a good idea if you have enough savings to absorb that extra $500 in case something does happen.

Overall, if you do have the savings, I'd recommend going for higher deductibles and putting your money aside (i.e. "self insure"). When you pay more for a lower deductible, you will likely end up spending more money in the long run.

Also, make sure your coverage is not redundant. If you have good medical coverage elsewhere for your own injuries, you can reduce the amount of coverage that your own plan provides for your own injuries (careful, often this won't cover other passengers in your car!). I do find that getting extra liability through your own insurance saves you a lot of money when you rent a car and then you're able to opt out of the car rental company's expensive insurance plans. 

[mandarin.orange]

I'd echo TareruK's advice to bundle with renter's insurance, and to raise your deductibles, if you are comfortable with the inherent risk. You don't mention if this is a commuter car (i.e. your primary way that you will be getting to campus). If I were driving every day, I'd keep lower deductibles for the increased protection, but that's just my comfort level. Also, do you have a designated parking space at home, or street parking? I was stuck with street parking my first 2 years of grad school, so I paid higher premiums to kept my deductibles low. This was more than worth it when I had to replace the windshield. Finally, if you are gone for fieldwork or long periods (like 2+ months), you can adjust the insurance to "nonoperation" status to save money over that period of time. Check with your state, but most won't let you cancel it outright and still have the vehicle legally registered. 

[bhr]

For what it's worth, I have relatively low deductibles on my car. I do bundle with renters (which actually made my renters essentially free), but to me, the extra $10-20 month I pay for my insurance gives me some security against those big deductibles later. My budget can absorb $10/month a lot easier than $1000 if my main/only source of transportation is stolen or totaled.

 

[dr. t]

Not that you haven't considered it, but my first question is always is it worth it to drop the car? Many universities are eminently walkable, and services like zipcar (often subsidized for students) work out to be cheaper than owning.

[TakeruK]

For what it's worth, I have relatively low deductibles on my car. I do bundle with renters (which actually made my renters essentially free), but to me, the extra $10-20 month I pay for my insurance gives me some security against those big deductibles later. My budget can absorb $10/month a lot easier than $1000 if my main/only source of transportation is stolen or totaled.

Bundling has made my renters insurance free too!

I agree that you should set your deductible based on what your savings and budget can handle. In the past, I chose to have a $500 deductible vs a $1000 deductible and pay $300 more per year ($25/month). However, the way I see it, it's basically taking out a $500 loan where you pay $25/month in perpetually, even after you've paid off the $500. Now that I have the ability to put away $500 in a savings account in case I need my insurance, I've switched to a $1000 deductible. After 20 months (at $25/month), I have saved the total difference and I don't have to continue paying $25/month.

I put it this way because the whole business of insurance is to give you peace of mind, but sometimes, peace of mind costs more money and causes more stress in other areas! It's up to each person how much the peace of mind is worth--for the first year of insurance, I certainly needed to have that lower deductible because I couldn't handle an extra $500 unexpected expense (but could handle the extra $25/month). However, as soon as I was able to put away $500 and modify the terms, it was one of the first things you could do to save money.

Other insurance things that were kind of mentioned is that you can classify your driving as pleasure only (i.e. only on weekends for groceries/errands and removing the commute use) and due to the lower use, it should lower your rate. That might be a good idea if there is good transit or if you can walk/bike to school. There's also a low usage rate--at State Farm, we pay less for our insurance because we drive it less than 7500 miles per year.

Edited August 18, 2015 by TakeruK

[shadowclaw]

Something else to think about: keep your insurance up to date with things like employment, education level, marriage, and any other info they might ask for. After getting my B.S. , my car insurance went down $6, and then another $15 when I got married (per month). Paying your 6 months in advance also saves you money, which for me was about $100 for the 6 month period. It's certainly not an extraordinary sum of money, but every little bit helps.

[hyronomus4]

This is super helpful information, thanks you everyone!  I will be parking on the street and I hadn't even thought about that increased risk.  So many things to consider!

[rising_star]

Parking on the street sucks. I used to have to do it and came home to a smashed back window one evening. So much fun. *gags*

Aside from the other suggestions, I would definitely shop around on rates once you decide on the coverage amounts you do want. They can vary widely, even between the major national companies. You might also want to see if you are (or will be) eligible for a good student discount. IIRC, that saved me like 5% a month on the premiums, which was totally worth sending them a transcript every year for.

[bhr]

If you can get USAA, do so. I switched to them a few years ago and have never been happier with a provider (both price and service). Plus, as long as I keep my license in my home state, they've allowed me to keep insurance there as a student.

[mandarin.orange]

This is super helpful information, thanks you everyone!  I will be parking on the street and I hadn't even thought about that increased risk.  So many things to consider!

Yeah, years ago during my masters I came home from a trip to find my side mirror ripped off my (street-parked) car at the time. Fortunately my car was okay for the two years starting my PhD (other than a couple parking tickets when I forgot to move for the weekly street cleaning, grumble) and the windshield break happened elsewhere...though the low deductible I already had in place was certainly a boon for its replacement. But one of the most heartbreaking things I saw was another student who'd posted signs on all the telephone polls on my block, wanting any information or eyewitness accounts for a hit-and-run that had happened to their car, how hard they'd worked to get/keep the car in the first place, and that they couldn't afford the body shop estimates.   

Glad to see people recommending specific insurance companies, because that would be my other advice -- when you get quotes, I would not recommend going immediately with the lowest bidder. Do your research about the company, esp. small local ones you may have never heard of before. Do they have a history of fulfilling claims quickly and professionally if something happens, or are they pretty dodgy? Sadly accidents and car issues are all to frequent; I was in a bad accident myself a little over 10 years ago, and my folks have been in two within the last year and had two different cars declared total losses. Dealing with claims can really be disruptive to life and your degree progress. So, insurance is the one expense I don't skimp on. I save money as a grad student in my grocery bills, going out for drinks/dinner only sparingly, bundled my phone plan with family, did the legwork to find and secure a good rent-controlled apartment , and take pretty modest vacations within state or to visit/stay with family. 

[TakeruK]

In terms of recommendations, I have only good things to say about State Farm. Every agent I've worked with (kept State Farm when moving so I've worked with several agents now) has been very knowledgeable and, in my opinion, honest/open about the product they are selling. They don't try to push me into buying a specific amount of coverage and they are very patient and happy to go through a million different permutations of coverage levels until I found the one that I thought was both affordable and covered enough. I also did my own research on insurance plans and was glad to see that everything my agent told me 

Just a month after I switched to State Farm, we were in a collision (the only one I've been in, thankfully)! We were rear-ended. When actually making the claim, you deal with a completely different set of people. It's a little scarier because you only talk to them on the phone, and they have scary titles like "Underwriting" and "Claims Adjuster" and they send you all the paperwork. The agents from my local office were very good though and they helped us go through the claims process. And everything went very smoothly. We had to document everything of course, and provide lots of evidence, but despite the claims' department's scary titles, we never felt like we were under investigation or being accused. I think this is important because the aftermath of the collision was already stressful enough, we would not have liked it if we also had to fight our insurance company. 

I'd second mandarin.orange's advice to find a reputable company and do your research. I would much rather get my insurance from a mega-insurance corporation like State Farm, Allstate, Farmers, etc. than smaller companies that might disappear!

[.letmeinplz//]

If you can get USAA, do so. I switched to them a few years ago and have never been happier with a provider (both price and service). Plus, as long as I keep my license in my home state, they've allowed me to keep insurance there as a student.

USAA is pretty great. 

[mandarin.orange]

I had (and liked) State Farm in my prior state, and have been with AAA since moving to California (parents' recommendation; they have been long-term customers). Their coverage is awesome.  

I would not recommend Geico, and riff off TakeruK's comments on the importance of a company's "bedside manner." They were very intimidating and shaming when I had the abovementioned accident -- and it's all by phone, as there are no office/local reps to meet with. They are cheap for a reason!

[shadowclaw]

My family has had a few different insurance companies over the years. By far, the best has been Nationwide. I've been in 2 accidents caused by other people while with Nationwide (well, one I wasn't even involved in, a co-worker hit my parked car). They were great about it and printed me up a check on the spot when I went to their claims center for an estimate. They were extremely helpful with the co-worker incident, because the guy wouldn't give me his insurance info and kept stringing me along saying he'd pay cash for the damages. 

We had Geico for a while, but when my mom hit a deer, it took over 2 weeks for someone to come do the estimate, plus several more days to get the check. The whole time, the jeep was undriveable due to the hood being bent up so far, you couldn't see well when driving. Liberty Mutual was faster, but their rates were terrible, and they also raised the rates for other drivers on the policy whenever someone got into accident. The final straw was when my dad hit a buried piece of concrete in the unplowed parking lot at work during a storm. The frame had to be replaced (which was super expensive) and the rates for everyone doubled over the next 2 years. I also find it interesting that 6 months after I turned 25 and got a lower rate as part of the 25 - 70 age group, they created a new age group of 25 - 30 and my rate was almost as high as when I was under 25. 

[Saggy]

Are you able to sell the car and get a bike?