[blueknigh7]

Insurance is just that - insurance. If I added up all my premiums over my 20 years of driving and then subtracted the amounts for accidents, I've been in... You could say I haven't gotten my money's worth. But all it takes is one accident or for something to go wrong to change all of that in an instant.

I did lookup the average cost of damages in an accident in the US though awhile back (maybe 2007?), and I remember being suprised that it was some low number like $3,700 in damages or so. Made me wonder why I was springing for high damage limits in my policy, but I also live in an expensive city with dumb expensive drivers. Anyway - in theory you could self-insure if you put aside enough money as insurance companies are making money somehow, but it all depends

Personally, I tend to full insure the new cars, and then continually evaluate if the full coverage is still worth it after they're paid off. I just ask myself - if the car were to be in an accident and totaled, would I be ok with that? If the answer is yes, and I'm in a financial position to obtain a replacement if needed, then sure - I go for liability only. Usually this is at some point where the replacement value of the vehicle doesn't make the premium worth it. I should also say that I live in a metro city with dumb drivers, so the risk of accidents is fairly high. And I have a long view of ownership - 10+ years, so that also factors into my plans.

I would also never advise purchasing a vehicle in an amount that forces you to make compromises in decisions - like if you can't afford to make full insurance coverages and would be devastated in the event of an accident. Hopefully, you're not in that position.

Of course, we all know that we would never be at fault in an accident. It's all the other drivers on the road we have to worry about.

 

[BriPac]

Moderated
Please keep your tone down. This is not Twitter.

 

[zhenya]

I evaluate whether I insure something based on the cost of insurance vs. the potential payout. We could afford to cover the cost of our Pacifica if it were wrecked, however, the incremental collision/comprehensive cost is under $300/year for us to have it fully covered. That’s a good deal. Some families pay nearly that to insure their phones… We don’t insure phones, nor do we buy any aftermarket warranties, etc.

 

[BriPac]

Moderated
Please keep your tone down. This is not Twitter.

Was this for me??. I don't recall having any tone at all more than anyone else enough to even bring that up.

 

[shawnee]

Self insuring for the potential loss of the van is a relatively easy cost/benefit analysis as the loss is predictable. Self insuring for liability is more risky. If you carry only the required minimum for liability you are self insuring for a significant potential loss. The typical minimums will barely cover the damage to the other car let alone injuries and other associated losses. My recommendation is to get the maximum liability coverage offered as it is relatively low cost. The added benefit is your insurance company will defend against any claims up to the policy limits. With a low limit policy, the insurance company may just pay out the the maximum and let you defend for the balance which could be several hundred thousand dollars.

 

[lutorm]

Self insuring for the potential loss of the van is a relatively easy cost/benefit analysis as the loss is predictable. Self insuring for liability is more risky.

This is the crux of the matter, I think. The van has a certain value and, no matter what happens, you can not lose more than that. Liability, on the other hand, has a practically unbounded risk, so is a really iffy proposition to self insure there because if you're wealthy then it just increases the likelihood of the opposing lawyers to go after all your assets. Besides, self insuring for liability is not legal in any state I know (except in some states I think you can post a bond to the state or something.)

On the self-insuring side, it comes down to two questions: first, can you afford to absorb the maximal loss? If not, then you need insurance. If you can, then the second question is whether you think you know more about your risk than the insurance actuaries. If the answer to that question is also yes, and you think the insurance is underpricing their product for you, then getting insurance makes sense. If not, buying the insurance will always on average be a loss.

I don't think I'm smarter than the insurance companies, so I'm basically of the opinion that it's always, on average, a loss to buy insurance.

 

[shawnee]

This is the crux of the matter, I think. The van has a certain value and, no matter what happens, you can not lose more than that. Liability, on the other hand, has a practically unbounded risk, so is a really iffy proposition to self insure there because if you're wealthy then it just increases the likelihood of the opposing lawyers to go after all your assets. Besides, self insuring for liability is not legal in any state I know (except in some states I think you can post a bond to the state or something.)

On the self-insuring side, it comes down to two questions: first, can you afford to absorb the maximal loss? If not, then you need insurance. If you can, then the second question is whether you think you know more about your risk than the insurance actuaries. If the answer to that question is also yes, and you think the insurance is underpricing their product for you, then getting insurance makes sense. If not, buying the insurance will always on average be a loss.

I don't think I'm smarter than the insurance companies, so I'm basically of the opinion that it's always, on average, a loss to buy insurance.

You don't have to be rich for lawyers to go after your assets including garnishing future wages. This could make for a miserable life dealing with the aftermath. Liability insurance is relatively cheap.

I'm not sure your point with the last sentence. Is it that you don't buy it as you see it as a loss or you do buy it even though you likely will not need to use it?

 

[lutorm]

You don't have to be rich for lawyers to go after your assets including garnishing future wages. This could make for a miserable life dealing with the aftermath. Liability insurance is relatively cheap.

I'm not sure your point with the last sentence. Is it that you don't buy it as you see it as a loss or you do buy it even though you likely will not need to use it?

Lawyers cost money, it doesn't make economical sense for the other party (or their lawyers, either working for their ins co or on contingency) to spend a bunch of money going after someone that they'll never be able to collect from anyway.

The point was that I think buying insurance is always, on average, a loss. If I buy it, it's because the potential loss is too painful (or I'm legally forced to).

If you buy insurance for something that you likely will need to use, it's not actually insurance but just paying a middleman. If losses are that common then common sense dictates that the premium will be the same as the loss. (The entire point of insurance is to protect yourself against unlikely, but large, losses. Small losses, no matter how likely, don't need to be insured against. Likely and large losses will put you in bankrupcy either way.)

 

[BriPac]

You don't have to be rich for lawyers to go after your assets including garnishing future wages. This could make for a miserable life dealing with the aftermath. Liability insurance is relatively cheap.

I'm not sure your point with the last sentence. Is it that you don't buy it as you see it as a loss or you do buy it even though you likely will not need to use it?

I believe auto self insurance is illegal in all states so the conversation should stop there anyway. I'm sure everyone knows insurance isn't just covering someone else's vehicle there is also property damage and bodily injury. One Accident could easily be $100k to the other party if they are even mildly hurt for property damage and medical.. AT LEAST get Liability if you don't want to do insurance at all, it transfers all risk to the Insurance company and NOT YOU. They even represent you with a lawyer if need be.. I'm in Vegas the most expensive so anyone anywhere else has it "much" easier and cheaper...Chris Rock in his comedy skit even says Insurance is for "In case Sh*t",,,, So you can die on a mattress...

 

[AridLoraine]

Former Auto insurance agent here. I would recommend full coverage. To save money you can have a high deductible. Go with the highest you can comfortably afford. Full glass coverage! You also want uninsured/underinsured motorist. I personally carry $1000 each for comprehensive and collision. I also have a $500,000 umbrella policy to cover excess liability claims.

 

[Thundering Banshee]

Was this for me??. I don't recall having any tone at all more than anyone else enough to even bring that up.

If you have to ask.

 

[BriPac]

If you have to ask.

Whatever that means.