I work remotely from home and I dislike long road trips. If I had to go to someplace far like Dallas or Houston, I’d rather take the bus even though I have a car. I don’t commute to work and so most of my driving would be just visiting my parents and sister nearby, going to church once or twice a week, etc. I often don’t even drive to buy groceries since there is a supermarket in walking distance.
My car is a 2023 Toyota Corolla; just bought it last week.
Over the past decade, I’ve averaged less than 6,000 miles per year (since I was working permanently remotely since 2013.) What would be the best car insurance strategy given that I drive a lot less than the average American?
Insurance is a lopsided bet between you and the insurer: you’re betting you’ll crash, and they’re betting you won’t. Most years you lose the bet, and you pay your premium. If they lose the bet, then they pay out for whatever the value of your claim is.
Statistically, insurance is a bad deal for you. So if you can afford to pay for your own damages, you’re likely to be better off in the long haul if you eschew coverage and take on the risk yourself instead of paying the insurance company to take on your risk for you. The state requires you to carry liability insurance in case you damage other people’s property - nothing you can do about that - but if you own your car free and clear, then you can choose to drop your collision coverage (for damage to your own property). My parents drove well-used cars for most of their adult lives, and they didn’t carry collision coverage. It worked out well for them.
But I did this myself a couple years ago. I have a 2007 Toyota RAV4 with only 41K miles on it, so you can imagine how little I drive. The response from my representative was (paraphrased), “How nice for you!” They were a lot more interested in my driving record, age, etc. When I told them I’ve never had a traffic ticket in my life, they said, “OK, we can do something with that.”
OTOH, I do see advertisements that specifically mention special rates for low-mileage drivers.
Agree completely w this logic. I’ve done the same although not recently.
Couple side-points on that idea:
In addition to dropping collision, they could also drop “comprehensive” AKA “Comp”, which covers damage to the insured car for all other perils. Like it catching fire or having a tree fall on it.
If the car is fully paid for. If the OP has a loan on it, the lender will require both collision & comp. To protect their car that the OP is borrowing while they slowly pay it off.
And if the OP can absorb the cost of the total loss of the car. Given his comments that a car is largely optional to him, that certainly helps even if the economics of the uninsured car being destroyed would be difficult for him. Conversely, folks who cannot get by without a car and can’t just write a check for a replacement car if needed, pretty well need to insure the one they have.
As always, the wise use of insurance is to lay off the risks you can’t stand to absorb alone. If you can stand to absorb them but it’d hurt you have a decision. If you’d hardly notice the loss were it to occur, then insuring against that is financially silly. Although it may have other benefits, you’re paying a price for that convenience. The extended warrantee sold for $3 on a $30 kitchen appliance being a classic case of economically silly = inefficient insurance.
It’s very important to note that liability isn’t just for property - it’s for the other person as well. You may think “how likely as I to get in an accident with a $100,000 car?!” - but the question is “how high and how quickly do medical expenses ramp up if I cause a serious accident with a car full of people?”
Liability is an insurance line item I’m happy to pump up - it’s not all that expensive.
Two kinds of “loss” are hard to self insure for. Seriously injuring someone else, or having an uninsured or underinsured driver cause serious injury to you. I recommend getting the most liability insurance you can afford, and the most UIM insurance they will sell you. (the latter is relatively cheap). I’ve had many clients severely injured by drivers with only $25,000 or $50,000 in liability insurance There’s not much I can tell them except, “take what they have and sorry for your loss.”
The obvious thing is to comparison shop. Unfortunately some of us find dealing with insurance agents so unpleasant that we never do it.
Or is there now somewhere online you can comparison shop which is not simply a lead generation site which will result in large numbers of calls and emails?
OP: I think State Farm which I have been with a very long time has a lower rate for under 6,000 miles.
I haven’t looked into this, but I know some insurance companies have a device they hook to your car to analyze your driving to determine your rates. If you’re a safe driver, you’ll pay less. In addition to looking at things like never speeding, they may take into consideration that the car isn’t driven very much. You could ask the company if they have a device and if they would consider low miles driven for lower rates.
There are also insurance companies that can monitor your driving behavior and give you rate reductions as a result. They do this one of two way:
You have to download an app that monitors your activity. It’s a pretty big privacy concern, and you have to manually take out instances of being a passenger.
They install a device in your car. Again, privacy concerns, though I think most of them only monitor your speed and acceleration/deceleration habits, not your location.
Couldn’t an injured plaintiff sue the defendant for civil damages beyond what the liability insurance pays? Although I’m guessing the kind of person who buys that kind of cheap liability is the kind of person who has few assets anyway.
I don’t know how often it happens, however I did know a defendant who was found liable for damages in a car accident and they had to turn to their homeowners liability policy when the damages awarded to the plaintiff exceeded their automobile liability insurance limit. I assume it’s usually limited by the defendant’s ability to pay though.
One of the tensions any state government faces is that a lot of poor people have cars and need to drive to get to work.
Liability insurance sufficient to fully protect an innocent other car & family from the costs of a horrific crash is simply unaffordable to those poor folks.
So should the state require those high liability limits and thereby cause most poor folks to drive uninsured, or should they set the limits such that the premium is affordable enough that at least some poor folks will carry that minimum amount which will in turn provide some protection to other drivers for more minor injuries?
Most states choose something along the latter lines. Leaving the rest of us to deal with the reality that a sizeable fraction of other drivers are under-insured compared to the damage to us that they can accidentally cause. IMO scrimping on uninsured / underinsured motorist coverage is about the dumbest mistake a non-poor car owner can make.
I use the Drive Safe & Save program with State Farm. I also drive under 6k/mo. I was going to get my discount amount so I could tell you but apparently I was supposed to switch to a new app to keep using the program and I never did it so I haven’t been tracked for a while and haven’t gotten a discount.
I think maybe in the past I’ve saved around $30. My insurance is around $600/year.
Mine does that, and also asks for an estimate of the number of miles I will drive in the coming year. This has no apparent effect on my rates.
I’m in the same boat as the OP: I have a 2014 Subaru with 40K miles on it. If it wasn’t for my volunteer work, it would have even fewer miles. I haven’t had any tickets or accidents in I can’t remember how many years, and no points on my driver’s license. The one factor that I can’t do anything about is my age (75) and I expect my insurance rates to go up every year that I continue to get older. I am considering removing collision from my coverage. But I’m also considering buying a newer car, so I would be right back where I am now (worse, actually, with a more valuable car).
The other thing holding me back is the purported market value of my car. I recently got a quote from one of those automated used car dealer things, and they valued it at $12K. I’m not relying on that as a final figure, but it’s still way over what I was expecting.
One small thing you can do so as not to leave yourself completely uncovered for collision insurance is to raise your deductible to the maximum you think you can afford.
If you take your car to get serviced at a dealership or Jiffy Lube (or some other name brand store), they’re entering your mileage, which gets reported into a third party that insurance providers access.