Penny Wise, Pound Foolish? – Auto Insurance Renewal

Auto insurance is one of those necessary expenses in my opinion.  But at the same time I recently came to the conclusion that maybe I don’t need as much coverage.  You see I own a 2007 Honda Fit and it has been truly an amazing car.  It still runs really well but it is getting old and the age is starting to show.  It has some rust spots that have started in the wheel wells and the interior, although I try to maintain it, is also showing some signs of wear.  When you put this together with the mileage of 135,000+ it isn’t worth a whole lot.  After doing some calculations on Kelley Blue Book I determined my resale value is anywhere between $2,000-$3,000.  Now this car likely has many years left and I am not ready to get rid of it but it did make me think when my semi-annual auto insurance renewal came in this summer.  Is it really worth paying $355.83 every 6 months when the total value isn’t all that high?

My first step was to go to another insurance carrier to get a quote matching my current policy.  I was able to find something less expensive so my next call was to my existing insurance agent.  Although I might be able to move my auto coverage to another carrier there was a huge downside.  We currently have the property insurance for both properties as well as the auto insurance all with Allstate.  If I were to move my auto insurance to another carrier I would lose my multi-policy discount on the homeowners policies.  This difference was more than the savings I would receive for switching the auto insurance.  No go with that plan.

On to the next plan.  I know that I would still need to have liability insurance on the car so I asked my insurance rep for a new estimate.  If I dropped the comprehensive coverage my cost would go down to $199 every 6 months leaving me with an approximate savings of $311 per year.  Now for the average person this additional cost might be worth it as it can be hard to come up with the cost of a down payment for a new car if something happens.  But being that we are financially stable we have enough money in cash at this point to go out and buy another car if needed having full coverage might not be necessary.

In the end I decided to drop the comprehensive coverage but making the final decision was a little stressful for me.  I have never been in an accident (knock on wood) and I know that I can just go out and buy a new car so I knew that it would be fine but when you have always had full coverage for your entire driving history this is certainly a big change.  If we weren’t financially stable then this wound’t have even been something to consider so it’s funny how your perception of the cost of things changes when you do have money.  Has anyone else had similar revelations?

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