How to save money on car insurance: terrifying decision edition

Last year I wrote a post about saving money on car insurance. It included a lot of the basics—shopping around, getting a policy for a full year instead of 6 months, and paying for that year up front instead of monthly. Plus it’s the same company I have my renter’s insurance with, so I got a bundling discount there.

Well it’s that time of year again (not a coincidence that this is now the second year in a row I’ve opened up a new credit card around this time 😂). And I’m back with more money-saving tips. Except that they aren’t the basics this year. I’m actually terrified to do this: I’m dropping the comprehensive and collision coverage for my car.

Old car life

This doesn’t apply to everyone. But it’s something I’ve been considering for myself since last year.

The past two years I’ve bought policies with both comprehensive and collision coverage. Because that’s what you do, right? But to save money, last year I set my deductible at $1000 instead of the $500 that might’ve made more sense for me (not that that would’ve helped with the infamous $472 4th of July windows incident anyway, but I also had no intention of reporting it to my insurance company and driving up my rates).

But my car is 12 years old. When I glanced at my mileage over the weekend, I saw that it had crept up to over 152,000 miles. If I’m being generous it’s worth maybe $3000. A quick Kelly Blue Book estimate says I could get about $2400 for it if I traded it in. I absolutely don’t include it in my net worth calculations at all.

After my $1000 deductible, if my car had been totaled last year, my insurance might’ve paid out $2000. Might’ve. It very likely would’ve been less. And for the privilege of having the insurance company on the hook for less than $2000, I paid an extra couple hundred dollars for insurance last year. Talk about some inefficiencies.

But what if…?

I knew last year that I was probably paying for way more insurance than I needed. So while doing the requisite comparison shopping of quotes this year, I ran the numbers to see what dropping collision would cost and what dropping both collision and comprehensive coverage would cost (note: this doesn’t mean I don’t have coverage at all! If anything happens and it’s my fault, I’ve still got insurance for it. Dropping the comprehensive and collision means my insurance company doesn’t pay out for anything that happens to my car).

I was tempted to keep the comprehensive and drop the collision coverage since it was only $170 more than dropping both of them. I park on the street in the city so the odds of something happening to my car (see also: windows) are disproportionately higher than say, the odds of something happening to my parents’ cars while in their driveway in their suburban area. But I ultimately decided that that was me making an irrational decision based on fear.

So I decided to do the terrifying thing and drop both sets of coverage.

I think it’s no surprise to anyone that, anxious person that I am, dropping the coverage kinda sorta terrifies me just a bit. I’m just crossing my fingers that this decision doesn’t immediately attract the attention of any vengeful traffic gods who will make me regret my decision (hi, traffic gods! Please be nice!).

I paid $977 last year for my car insurance (guys, car insurance in DC is sooooooo expensive). This year I’m paying $621, for a savings of $356. That’s no small change and means I’m now paying $30/month less for my insurance.

Snow: not immediately dangerous, but I would’ve been covered if something had happened to my car last winter, like a thick coating of ice bringing down a tree

Emergency fund for my car

After the aforementioned windows incident last year (have I mentioned that one enough yet?), I decided to start a sinking fund specifically earmarked for my car. My deductible was $1000 so that’s what I set the goal for. I’m at $970 of that $1000 goal after having to dip into it for the $280 worth of work I had to have done on my fuel system a few months ago.

So I’ve got that. Plus I’ve got the $350 difference between what I paid for insurance last year and what I’m paying this year.

But my ultimate emergency fund is that I don’t need my car. At all. By any means. I love the convenience of going hiking and to Costco whenever I want. If I’m traveling anywhere within driving distance, I can drive there on my own schedule. I no longer have to rely on the bus schedule to visit my parents. If it’s dark out, I can drive home from my second job instead of paying for a rideshare.

But none of that means I need my car.

My roommate has a car and I could easily go with her to Costco, like I used to do with my first roommate before I got my car. I know other people with cars. I could rent one if needed. I could take the bus down to NC. I walk to my first job. I could take a Lyft home at night from my second job. I live in a city full of public transportation options.

It’s going to be fine. I think.

I’ve got options is what I’m saying. If something happened to my car (knock on wood!) I wouldn’t need to replace it right away. That would give me time to either find a good replacement or make the decision that I want to stop paying for car insurance and gas and repair work since I don’t need to (aka not replace my car until I move somewhere else).

That doesn’t mean I’m immediately comfortable with no longer having the security blanket of my comprehensive/collision insurance, but it does help alleviate my worrying. And it means my May is going to be slightly less expensive than I was planning for.

I stayed with the company I had last year, which means I’ll again get a slight discount on my renter’s insurance this year since I have both policies with them. That’s a small win, but I’ll take it, too.

10 Replies to “How to save money on car insurance: terrifying decision edition”

  1. That is so brave of you! Come to think of it, it’s probably something I should consider since my car is 13 years old. I’m currently paying almost $1400 a year for car insurance (lol Canada), so any savings would likely make a big difference. Unlike you though, we don’t live in an area with enough other transit options that we could survive (comfortably) without a car altogether. If I lived in a big city like Toronto, I would for sure do away with my car entirely. Thanks for sharing your decision-making process with us – it’s super interesting!

  2. Awesome post, i did the same thing as well last year and saved a ton. Both of our cars are over 7 years old, and frankly speaking aren’t worth a bunch of money, so i’m going to be self insured on cars moving forward.

    However, i do suggest you look into getting root insurance. This is no plug, we aren’t sponsored by them or anything, but our rates came out much cheaper, over $100 / mo (for some context, i don’t have the best driving record).

    You basically download an app, it monitors your driving for a couple weeks, and spits out a quote. Pretty simple. The main Con i can see here is, they haven’t been in business as long as other popular providers, so there is definitely added risk. But so far everything seems to be on the up and up.

    We also haven’t filed a claim yet, to see how that process actually goes. But hey, i thought you might want to check it out

  3. That’s a tough decision to make! But ultimately the right one I think. Like you said, you have your own car emergency fund you can tap into, as well as worst case you ultimately not even needing the car if it gets totaled or becomes inoperable.

    Having that safety net should hopefully make you a little more comfortable with the decision! 🙂

  4. Good for you on figuring out that you really don’t need your car. That is peace of mind (plus the ER fund to cover the deductible).

    I have an old car too and dropped collision & comprehensive. I am self-insured in the sense that I have enough money saved to buy a new used car if something were to happen to it and that gives me peace of mind.

    I think the key is having a feasible backup plan. Sounds like you have it!

  5. My car is 7.5 years old. We pay $532 for insurance, twice a year, which works out to $88.70/month. We have the maximum liability levels and still have comprehensive and collision. My plan is to drop them once the car is worth less than $3000, which I’m guessing will happen in the next year or two since it’s already only worth about $4000. We had a small accident last year and we didn’t use insurance because it cost us $1700 to fix and we have a $1000 deductible, so it was right on the line of whether or not to use insurance.

  6. We are dropping our collision and comprehensive coverage this month on our newer car (2010) and it’s a bit nerve wracking. We also plan to sell both our cars (yikes so much work) to get a hybrid this year, since we just found out both cars need lots of work. We’ve been entertaining the idea of going car free, but that’d be pretty intense since we live in suburbia. Our bikes work great during the day, but not at night 🙂
    Thabks for sharing your thoughts! Helps give me some insight into my situation.

  7. Saving $350 is pretty darn good, that’s a buck a day. This is a reminder to me to make a phone call or two, I’m pretty sure I can get mine down. I just hate dealing with people like that, they’ll be trying to up-sell me for sure.

    And thanks for the backlink!

  8. My car is from 2005 with 125k miles and doesn’t have collision or comprehensive. I think it makes sense to drop it at that age! In my mind, the main thing that insurance is for is liability, anyway – those medical bills could really rack up. I’m mostly worried about people claiming damages on me, rather than my own property 🙂

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