What kind of car insurance do I really need?
July 24, 2014 9:01 AM   Subscribe

What kind of car insurance do I really need? I feel like I'm spending too much and possibly overdoing it. I'm with Progressive now but don't have any particular loyalty. This is in Wisconsin.

- I have an 11 year old car that's paid off. It's a BMW 3-series so they consider it a "sportscar" which is ridiculous considering how I drive but I doubt I can do anything about that.
- I do not have the money to replace the car, not even a downpayment for a replacement
- I wouldn't bother to fix cosmetic damage on it, I plan to drive it into the ground
- I drive about 4000 miles a year, mostly in the city
- My last speeding ticket was in 2008 in a different state
- My only accident was in 2009 and I was not at fault
- I park on the street in a safe neighborhood, but... it's in the same zipcode as one of the most crime-ridden neighborhoods in the city. I got massively dinged for that when I moved. Are there any companies that are more granular in their rating system?
- I'm 39, female, and technically still married (which should bring down my rates), but I am the only driver and I will be divorced in the next few months. Do I have to change my marital status when that happens?

I'm in Milwaukee, Wisconsin. I'm on a really tight budget but I don't know if that means I should get more insurance in case something catastrophic happens, or less, so I save in payments.
posted by desjardins to Travel & Transportation (12 answers total) 4 users marked this as a favorite
Since you're with Progressive now, have you tried their Snapshot doodad? It's a gadget that plugs into the diagnostic port of your car and tracks your driving habits (distances, times of day driven, number of hard stops, etc.) and then calculates a discount based on those stats. I just finished one month with it (I've had Progressive for over a decade, but never knew about the program until someone mentioned it) and got a chunk taken off my rates already. Won't help with the overall coverage question, but it may help with the "sports car"/"how you drive" gap.
posted by okayokayigive at 9:08 AM on July 24, 2014 [2 favorites]

Have you shopped around? I am paying Geico half what I Progressive wanted to charge me for almost the same coverage. I have no idea why.

Other pertinent questions: What's your deductible? How long could you go without a car (like, do you need it to get to work)? What's your plan for when the car dies, and how is that different from your plan for if the car gets stolen/totalled?
posted by mskyle at 9:14 AM on July 24, 2014

There are three components to auto insurance:

Liability: You want as much as you can afford, to protect you in case you're at fault in an accident for the other party's medical bills and any pain and suffering pay out. I have 100/300/100.

Uninsured Motorist: This protects you against someone wiping you out without insurance, or in hit and run. I get this.

Comprehensive: This covers the car. If you drive it into a lamp post and total it, they'll give you a check to compensate you. It's good for cars that you owe on, so you're not out of pocket, if you finance, the finance company/bank will insist that you have this.

Find out what the book value of your car is right now, use NADA or KBB.

You don't have to have comprehensive if your car is paid off. It depends how screwed you'd be if you mess up your car. I checked KBB, it's worth about $8000k give or take, depending on damage and mileage if you sell it privately.

One thing you might want to do is trade your car for a newer, cheaper car, that will be less expensive to repair. I owned two Mercedes and once I broke the 100K on them, suddenly they needed THOUSANDS of dollars worth of damage.

If you're really determined to keep your car, get lots of quotes.

Frankly, I'd move to a late model Civic, which are cheap to own and insure, and I'd ditch the BMW.

But that's my experience. I'm a VERY happy Civic owner.
posted by Ruthless Bunny at 9:16 AM on July 24, 2014 [2 favorites]

Check with AAA. I had what I thought was pretty reasonable insurance and they cut in close to 50% I think. Also, I consider uninsured motorist mandatory.
posted by Room 641-A at 9:16 AM on July 24, 2014 [1 favorite]

Response by poster: Frankly, I'd move to a late model Civic, which are cheap to own and insure, and I'd ditch the BMW.

KBB says it's worth about $4500, so that's not going to get me a late model anything unless you know something I don't. I could still get to work if I absolutely had to via bus. Errands are more problematic.
posted by desjardins at 9:41 AM on July 24, 2014

If you wind up in an accident and the amount it would take to get your car running again is more than the blue book value, they will declare it totaled and cut you a check rather than pay for the repairs. This has a tendency to screw over people who drive older cars that are completely paid for. So one thing you should consider is how likely it is that an accident would be a reason to declare it "totaled."

Most likely, the best thing to do is to shop around to get a better deal and then take a high deductible. Then squirrel away the difference (and/or pay down debts) so you are better positioned to handle the financial part of the crisis should something happen to your car. Given the age and value of the car, most likely, you should just buy the minimum required insurance to be legal in your state. Here is the requirement for your state.

Also, yes, you have to change your status when you divorce.

I will also suggest your check out this info (I worked in insurance, thus, I am very familiar with the fact that what is true in one state can be not true at all elsewhere, so I looked up some state specific sources of info for you rather than just speak off the cuff and make an ass of myself):

Info about Wisconsin Auto Insurance
Wisconsin is a Tort Auto Insurance State. You might want to understand what that means before you decide.
posted by Michele in California at 10:47 AM on July 24, 2014

I work for a major insurance company. Call Progressive and ask to speak to a licensed rep for coverage counseling. Ask them to define each coverage for you and identify it's cost. Have them run as many quotes as you need to feel satisfied that you can make the best decision for yourself on what coverages to purchase. Then shop. Rates can be very different between companies, so it's in your interest to be educated and proactive.
posted by argylekneesocks at 11:01 AM on July 24, 2014

Room 641-A:

I have insurance through AAA and they recently did this to me.

That having been said:

When I first switched to AAA insurance, they saved me about 40%. I called their sales department after they increased me, and they switched me to a different insurance company with lower deductibles for less money than what I paid before the increase (and, astonishingly, they beat out the other insurance companies I called). I'm still waiting for the new policy declarations page in the mail.

So, call AAA, but also call them out on any BS rate increases in the future.

To answer the OP's question, though

Car insurance usually consists of a few components:

Collision -- insures you for property damage to your car and others's cars resulting from accidents. If you don't care about cosmetic damage to your car, you might want to drop this part from your coverage (or, carry only the minimum that Wisconsin requires). Keep in mind though, that if you drop collision insurance, and then crash into a 2015 Maserati in an accident that's entirely your fault, you'll probably be screwed.
Liability -- insures you for injuries to yourself and others resulting from accidents. Your state will mandate a minimum coverage level for this. However, as Ruthless Bunny suggests, you want as much as you can afford. I carry 100/300 (which means they will pay up to $100,000 in medical costs per person up to a total of $300,000 per accident). Additionally, you can get "umbrella" coverage for up to $1,000,000, but I don't carry this. Even in the worst accident I've been involved in, which wasn't my fault, I was sued (it's a long story that only makes me pissed off) for a total $70k of medical expenses (and this was with four people in the other car) -- and my insurance company went to court to knock that amount down to some much lower amount that they never told me.
Comprehensive -- insures you for property damage to your car resulting from storms and other so-called "acts of God", as well as theft and vandalism.
Uninsured or Underinsured Motorists protects you in an accident if the other driver(s) don't have insurance or don't have enough insurance coverage to cover the full costs of the accident. Again, your state will mandate a minimum coverage level for this. And again, I think you should get as much as you can afford.

Your deductible is the amount you'll pay out of pocket for any claim before the insurance pays the rest. Usually this is $500, but if you want to save money on insurance and feel reasonably confident that you won't have an accident, you can usually save money by increasing your deductible to $1,000. It's possible to have different deductibles for Collision versus Comprehensive insurance.

Different states have different rules for accident inclusion in premium determination. Examples from states I've lived in: Massachusetts policies can only take into account accidents that were your fault and tickets and nothing that happened more than 5 years ago. Maryland policies, on the other hand, can take into account ANY accidents, and only non-camera tickets (no red light camera or speeding camera tickets) and nothing that happened more than 3 years ago. I don't know these regulations for Wisconsin as I have never lived there. Your insurance company should be able to tell you.

As far as having a divorce finalized, I *think* you can keep your policy as married for the entire year, but when you renew the next year you'll have to go back to single. Again, your insurance company will know better. For what it's worth, there was no change to my premium at all when I went from single to married; at the time they said it was because I was older than 25, and getting married would only have made a difference to my premium if I was younger than 25.
posted by tckma at 11:11 AM on July 24, 2014 [1 favorite]

Collision -- insures you for property damage to your car and others's cars resulting from accidents. If you don't care about cosmetic damage to your car, you might want to drop this part from your coverage (or, carry only the minimum that Wisconsin requires). Keep in mind though, that if you drop collision insurance, and then crash into a 2015 Maserati in an accident that's entirely your fault, you'll probably be screwed.

Collision only covers damage to your car, not to someone else's car. The accident with the Maserati is good reason to have ample liability coverage; collision has nothing to do with covering someone else's car. Damage to other cars is covered under the property damage portion of liability coverage.

Whether I'd keep collision and comprehensive coverage on a $4,500 car depends to some extent on the difference in price. Are we talking $10 a month here? If your car were suddenly totalled, would coming up with that amount out-of-pocket be difficult for you? Would you need that amount on short notice to put down a down payment on a new car? If so, it might be worth paying that little extra amount for the peace of mind. If it's much more expensive that that, maybe you want to drop it. Only you know what you're comfortable with and can make that decision.

Most insurance company websites allow you to go into your policy online and tweak the coverage amounts to adjust your coverage and payments. You might want to spend some time playing around with that.
posted by Leatherstocking at 12:12 PM on July 24, 2014 [1 favorite]

Oh, and maybe it's more location- or-situation-specific, but I'd also consider rental coverage essential.

In addition to repairs that just take longer than expected, there's also the chance that your car gets totalled or is otherwise undrivable and it takes a month or two for all the insurance companies to sort out who is going to pay who(m?) for what. Ask me how I know.
posted by Room 641-A at 1:20 PM on July 24, 2014 [1 favorite]

The insurers rate your BMW high because a.) It is a "performance" vehicle. At least that's how BMW markets them. And, b.) They are crazy expensive to fix. There is no cheap part on a BMW.

The combination of not being able to replace it on your own, and your planning to drive it til it dies pretty much means you need close to the full-boat comprehensive coverage, to cover any eventuality. You definitely don't want state-minimum coverage.

You need to shop around.
posted by Thorzdad at 3:33 PM on July 24, 2014

One thing you seriously need to consider is if your car is worth insuring. 11 year old car is not worth much money even it is a BMW. I understand that you don't have money to buy another car but that doesn't mean that the insurance company will give it to you enough money to buy a new one. They will only pay you the current worth of insured car, minus deductibles.
posted by TomDunn at 4:43 PM on September 14, 2014

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