By Arthur Vidro
On Consumerism
Over the past few years, car owners have complained about how much their insurance rates have gone up.
It’s true. As vehicles get more expensive, replacement parts likewise get more expensive, which results in more costs to insurers if they have to foot the bill for car repairs.
This is true even if we disregard any tariffs that might be imposed.
From a year ago to now, my own car insurance premium went up by 11%.
But in this case, that’s not so bad.
It went up to $130. I’m not used to paying that much, but I can pay it. And that $130 covers a six-month period. So it’s still less than $22 a month.
I remain amazed at how much more others fork over for their car insurance.
Some of it has to do with geography. Folks in Louisiana, for instance, face higher car insurance rates. Even within a state, rates can vary based on which county one calls home.
But a lot of it has to do with title.
You see, you don’t get the title to your car until you’ve paid it off. And until you get the title to your car, it isn’t exactly yours. The financing company has a stake in the matter, and normally as part of their lending you money at whatever rate of interest, they require that the vehicle be insured to the hilt. After all, the vehicle itself is usually the collateral for the loan. You miss a couple payments, they are entitled to repossess the car.
Even if there is no car loan, if you lease a car, you’ll have to pay extra in insurance for the privilege because that car is expected to be in solid condition when the lease expires and it is returned.
However, once the car is paid off and you are the sole owner, you can reduce the amount of insurance coverage.
For example, I don’t have what is called comprehensive coverage, which covers you for windshield breakage and car theft. If you live in a high-crime city (such as Miami or New York), you should remain insured for car theft. Also, think twice before dropping comprehensive coverage unless you have off-street parking available, preferably your own garage.
Even if you desire or require comprehensive coverage, there is often a discount on it if you have garage parking available to you. But you have to tell your insurer about the garage, otherwise they won’t know.
Nor do I have collision coverage. (Though I pay a little extra to make sure we’re covered for human injuries sustained through collisions with uninsured or underinsured vehicles that encounter us.)
If you have a long history of not getting your car dinged, then it might make sense to drop collision coverage. But if your history is one of car crashes every decade, then you’re probably better off keeping the coverage.
One reason I have a history of non-collisions and non-dings is that in parking lots, I have always followed the mantra of “park it where they ain’t,” w hich means I avoid the spots closest to store entrances. This is where vehicular traffic is heaviest and most of the collisions and scrapes occur; though for some reason most everyone else covets those spots. I tend to park 100 to 200 feet from the entrance. The walk won’t do me any harm. And it keeps the car safer.
Other factors that limit my car insurance:
We don’t drive that many miles. The insurer knows we drive less than 5,000 miles per year, and for that we get a discount.
For reasons I don’t understand, our insurer provides a small discount for college graduates.
Another discount we get is for “bundling,” which means we use the same insurer for our vehicle as we do for our house.
There’s one discount I’ve never received — and never will. For having an on-board device that feeds data on your driving to the insurer. I’d rather veer out of a lane to give bicyclists or pedestrians extra room, than stay in the lane and risk grazing someone to avoid being penalized by my insurer for having left the lane demarcation.
Another discount I don’t receive — signing up to pay the insurer automatically from a bank account. Many folks save a bit this way, but I prefer limiting the number of companies with access to my bank account.
One fee others pay that I don’t — an installment fee. If I were to pay the $130 in monthly installments, I would be hit with a $7 fee for each payment, on top of the premium itself. That $7 a month is, to me, needless spending, and adds up. Plus, the installment fees — heck, all their fees — are “subject to change without notice.”
It helps to avoid the little fees, such as (for my insurer) $10 for each late payment, and $25 for each returned payment (such as for insufficient funds).
My eye-opening experience with car insurance came in about 1990, when I was paying above $1,000 for a major mechanical repair. At one point I asked the mechanic how much my 1981 Chevy Citation might be worth.
“You might get a thousand dollars, if you’re lucky.”
I was paying more for the repair than the car itself was worth.
Next time it needed a major repair, I chose to buy a newer used car instead of having the repair done.
