• About Me
  • Contact Me

Frugal Living

Indulging in life, financially responsible

auto

Adjusting Auto Insurance

September 9, 2015 by Andrew Leave a Comment

Yesterday the auto insurance bill came in the mail.  It is one of only a handful of bills that is not auto paid in our house.  The reasoning is pretty simple.  First off, it is not a monthly bill but a semi annual bill.  Secondly, it is wise to reevaluate the type and amount of coverage from time to time.

Our 2006 Pontiac G6 is getting close to the 10 year old mark so we were looking to drop certain coverages.

Comprehensive

One of the easiest changes we made (in my opinion) was dropping comprehensive coverage with a thousand dollar deductible.  Comprehensive covers damages to your car from wind, hail, flood, fire, theft, vandalism, or hitting an animal.  By keeping our car stored in a locked garage and driving predominantly in town, most of these events are unlikely to happen.

Savings: $24

Liability

In Illinois, motorists are required by law to have insurance and they are required to carry at least 25/50 liability.  What does that mean though?  25/50 coverage means that in the event of an accident, a single occupant of the other vehicle is covered for 25 thousand worth of expenses.  The second number, 50, means that if more than one person is injured in the second vehicle then the insurance will pay out up to 50 thousand.  Liability insurance protects you from having to pay the other party for damages they received because of an accident involving your car.  While the minimums sound high, they really aren’t.  If you consider the cost of medical treatment and legal battles a small fender bender could easily blow past the minimums in no time.

The general rule of thumb is to carry enough liability coverage to cover your net assets.  The last thing you want is to have a lien placed on your house or your wages garnished to pay the helivac bill of someone else.

We increased our liability from 100/300 to 250/500.

Cost: $14

Medical Payments

Medical payments cover your own hospital expenses.  One of the nice things about auto medical versus your personal health insurance is that auto medical will pay out for accident related injuries up to three years after the incident.  We increased our medical coverage from 5000 to 25000.

Cost: $11

Collision

Our existing policy had a $1000 deductible collision coverage and even though it made up 1/3 of our total bill we decided to keep it.  The math did not work out to increase the deductible to 2000 or to drop it entirely. Assuming our car has a fair market value of five thousand dollars, it would take 100 years of no accidents at the higher deductible/lower premium to pay the 1000 dollar difference.  Dropping coverage completely would save us $450 assuming we had no accidents for the next five years.  A single fender bender would likely cost over $1k in repairs.  Perhaps in a couple more years when the car has depreciated more we will drop collision.

Change: $0

In Summary

Our semi annual premiums will increase by $1.23.  We have less coverage to cover damage to our car, but quite a bit more to cover personal medical bills and to protect our nest eggs from lawsuits.  There is a saying that I read somewhere on the internet, “young people are underinsured, old people are overinsured”.  Insurance of all kinds is a gamble and it is helpful to reevaluate what kinds you need and how much as your life circumstances change.

Posted in: Finance Tagged: auto, Bill, Car, insurance

Recent Posts

  • Min/Maxing Car Sale for Highest Value and Lowest Headache
  • Buying a Car with Data Driven Decision Making
  • Hot Lunch
  • Baking with Dad
  • Winter Nights

Financial Goals

Recent Comments

  • James Spurr on Building a Self Watering Raised Garden Bed
  • suwaidi online on Total Cost of Ownership – Inkjet vs Laser Printers
  • bcimechanical on Troubleshooting a Gas Furnace
  • g on Troubleshooting a Leaking Whirlpool Dishwasher [UPDATED]
  • Christie on Building a Self Watering Raised Garden Bed

Archives

  • December 2020
  • December 2018
  • July 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013

Categories

  • Business
  • DIY
  • Finance
  • Frugal Boy
  • Frugal Girl
  • House
  • Misc.
  • Parenting
  • Reading
  • Recipes
  • Savings
  • Technology
  • Travel
  • Uncategorized

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org

Copyright © 2025 Frugal Living.

Omega WordPress Theme by ThemeHall