Car Insurance Coverage

June 25, 2009 11:18 AM

What car insurance coverage to I need for a brand-new car?

We're haven't had a car for a couple years while living out of the US, but now we are relocating to an area (MA--small town) where we will need one. It's probably going to be a RAV or CRV. We're in our early sixties, have had spotless driving records for decades, never filed a claim, hope not to drive more than 8000 miles a year, and will take $1000 deductible.

In most things, such as insurance, we usually choose at the most conservative end of the spectrum--say 85% of the maximum coverage the insurance company would like everyone to buy. With every contract full of consumer traps these days, what levels of liability, collision, etc. should we buy to have peace of mind?

posted by Elsie to travel & transportation (12 comments total)

If you're making payments on the vehicle, your loan will likely require you to have full (i.e. comprehensive) coverage.
posted by notsnot at 11:24 AM on June 25

If you are financing your vehicle, your lender will require you to carry comprehensive (fire, theft, vandalism) and collision until you pay the vehicle off and become the title holder. Then you can do whatever you want.

As far as liability goes, this page at mass.gov will give you the state minimums you must carry. How much you'll want to carry in reality is dependent on the worth of your assets and the risk level you can tolerate.
posted by pianoboy at 11:42 AM on June 25

A good agent will be able to advise you on your coverage levels based on your lifestyle, needs, wants and lender requirements.

If you have a note and do not have title, the lienholder will almost always require full coverage *and* that your deductibles are $500 or less. I was able to negotiate this with my credit union once, as they were the lienholder and I maintained a savings account with them that was always funded at $5000 or more.

Insurance is such a crapshoot that it's best to work through an experienced agent who can price it through several different companies.
posted by FergieBelle at 11:42 AM on June 25

The state minimums for liability insurance in MA are $20,000/$40,000 for bodily injury and $5,000 for property damage. These are quite low, and with medical costs and vehicle values being so high, you'll definitely want to carry higher limits. Also, if you cause an accident and your insurance doesn't cover the other person's expenses, they can come after you for the difference, and that includes coming after your retirement. Not a good deal.

I'd recommend at least $100,000/$300,000 bodily injury and $100,000 property damage. If you ask for quotes of different levels, you'll probably find that the price difference for higher limits of coverage really aren't that much more expensive. For instance, depending upon your situation, the difference between $50,000 worth of property damage coverage and $100,000 can be $20 or less. Also, shop around, get quotes from several different companies before going into the dealership, and make sure that the insurance companies know that your "lapse" in coverage was due to being outside of the US, and not because you were just cruising around without insurance.
posted by scarykarrey at 11:43 AM on June 25 [2 favorites has favorites]

I agree with everyone else that you really should be going through an independent insurance agent in Mass. He or she can get you the best deal.
posted by Hanuman1960 at 11:46 AM on June 25

How much do you have in assets that you would need to protect?

Generally, boosting coverage does not cost that much. Going from $50k to $100k liability is usually more than going from $100k to $300k, because there are a lot more claims in the former bracket. This type of insurance tends to be priced using actuaries rather than just marketing.

The real stuff they want to sell you for profit is the add-ons like rental car insurance.
posted by smackfu at 11:46 AM on June 25

smackfu has an interesting angle on it- insurance doesn't protect stuff, it protects assets (and inversely, protect you from having to owe someone money).

The simplest is getting theft/accident insurance on the car. If you are financing the car, even if the finance company didn't require it, you'd want insurance, because you'd hate to have to be making payments on a car that's gone. So you insure it.

For liability, it gets trickier. It's one thing to have to insure against smashing up someone else's car. You carry $40k of insurance on that, and you are pretty much covered for most cars you might damage. That's easy. But bodily injury and property damage, the sky is almost the limit. Consider this scenario- you get hit by someone, which causes you to hit a truck, which causes it to careen into a building. The truck, its load full of ipods, and the building all suffer tremendous damage. Because that was all caused by you hitting that truck, you are on the hook for it. You might be able to convince a jury that blame should shift to the guy who hit you, but maybe not. You could need hundreds of thousands of dollars in insurance to cover that incident.

And increasing coverage beyond the minimums is usually not very costly at all. If I remember right, for me, doubling the state minimums was something like $40 every six months. That's a small price to pay for the value you get.
posted by gjc at 11:58 AM on June 25

I have an agent that I really trust here in Mass -- she's the aunt of a friend I trust, I've met her and her kids, and she walked me through the process really patiently when I bought my first car. I'm sure she or others at her agency -- she's a co-owner -- would do similarly for you to figure out exactly what's reasonable for you. If you'd like her agency's info, send me a MeMail.
posted by olinerd at 12:11 PM on June 25

When figuring out deductibles for comprehensive and collision coverage, think of how much cash you generally have on hand at any given time, or how much credit card debt you're willing to suffer in a pinch, or how much damage you're willing to accept at any given time, and how often you think that might happen.

For example, if you don't have much cash, and don't think you'll ever have much cash, it may sound like it makes sense to have a lower deductible. But then your premiums go up quite a bit.

Then consider how much damage could be repaired on a car for less than a deductible, and how much you could deal with that. If you scratch your fender and have a $1000 deductible, are you really going to pay up to $1000 to just fix a scratch, or just accept the scratch and drive around with it anyway?

But if you really do damage the car, you're far more likely to do more than $1000 worth of damage. But this scenario is rare, too.

In other words, don't pay to lower a deductible just because it sounds like it would be nice to have a low deductible.
posted by Cool Papa Bell at 12:12 PM on June 25 [1 favorite has favorites]

The question of insurance completely depends on your finances. For example, if you've paid cash for the car and you can afford to pay for another car if it gets totaled, you might choose to not pay for comprehensive insurance.

Insurance is to insure you against bills you cannot afford. It's hedging your bets. If you can financially afford bigger losses, then you should not hedge against bigger losses. In some states, with enough money set aside, you can self-insure. It just depends on your ability to pay for loss.
posted by Houstonian at 1:26 PM on June 25

A low deductible might also tempt you to make many claims, which will have an adverse affect on your rates.

You've got a $100 collision deductible, and someone dings the door at the grocery store. You think "Only $100!" and get it fixed. A couple months later something similar happens. "Only $100!" At your next renewal your rate jumps significantly.

You can probably add full no-deductible glass claims [to protect basically the windshield] for a relatively small fee. This can be valuable, and a lot of times glass claims do not count against your claim history as described above. You'll want to ask your agent about that, though.
posted by chazlarson at 1:40 PM on June 25

I am not sure what the feeling is around here about GAP but the way people drive in Texas I will never be without it again (while upside down on a car). I have a perfect driving record but my (beloved, old) Subaru was totaled by a drunk driver. If you would be in trouble if the car was totaled in an accident (I mean, you would owe the lienholder money because you owe more than the car is worth) then I'd recommend GAP.
posted by getawaysticks at 10:03 AM on June 26