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.
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.