Our son headed back to college this weekend – ending our ‘No Responsibility January’ – and starting his Spring Semester. Among other things, this means we need to call our insurance agent this morning and take the car insurance off the vehicle that he drives when he is home. Car insurance runs about $900 annually for the 2004 Acura TSX that he drives when he is home, so we save $75 every month that he is away at school. He is accident free and gets good grades – I hate to think how much higher they would be with a less responsible driver (or a more expensive vehicle).
If you haven’t noticed, car insurance rates have gone up dramatically over the last five years and are expected to continue to rise in 2018. Kiplinger’s reports that car insurance has inflated at a rate 3.5x faster than general inflation. Car insurance went up by +21.5% from 2012 to 2017. The sharp increase is a result of the added electronics and safety equipment on vehicles. I read recently read that almost 30% of the cost of a new vehicle is the electronics – up from just 5% twenty years ago.
Additionally, Kiplinger’s reports that comprehensive claims have gone up 25% in the last two years – even before cars damaged by Hurricane Harvey were added in. I had two of my own comprehensive claims in 2017: my SUV was hit by a softball at the ballfields we play it last April and about a month later a big rock kicked up from road construction and put a gash in the roof. Thankfully, they were covered as comprehensive claims and didn’t result in my premiums going up.
Every few years we sit down with our insurance guy and compare his rates with a competitor, we last did this in 2017 and found that we were getting a pretty good deal from State Farm. We spend over $3,000 a year in car insurance, so it is worth the time invested to see if we can get a better deal. Our deductible (at $500) is probably lower than we should keep it, but I don’t want it to be so high that I would second-guess getting my vehicle fixed after an incident. Additionally, when I looked at raising the deductible to $1000, it only saved us $300 a year across all of our cars. Just one incident a year – on any of our 4 cars – makes the lower deductible worth it to us.
Are you seeing your car insurance rates go up?
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MrFireStation 
Hate to use the cliche, but did you check with GEICO? I switched over a year ago from my long time insurer and saved quite a bit. I moved my Homeowners too and added an Umbrella policy. One thing I noticed, both companies didnt directly write the Homeowners policies. They both contracted it out to another company called Homesite I believe. The coverage amounts were similar, but under GEICO my homeowners cost was less even though it was underwritten by the same company. I thought that was a funny observation. I think it does pay to shop around every few years.
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It is an advertising cliche, but I haven’t comp shopped with them yet. I definitely will. Thanks for the prompting!
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Yes, Chief. Our cars get older; we get older; but our car insurance gets more pricey. Yet, it’s not an option from a financial planning standpoint. We could save a few bucks switching to Geico. But service quality and timeliness are important to me. We use Liberty Mutual. Their service people, policies, and punctiliousness meet my high expectations. In the Northeast, where many drive angry and reckless, with or without licenses, registrations, nor insurance, it’s good to know that no matter who crashes me, Liberty Mutual has my back.
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I think we looked at Liberty Mutual (among others) last time we comparison shopped. We didn’t save vs State Farm – we’ve been pretty happy with State Farm (27 years!).
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I rarely make decisions based on price as the dominant factor. Relationships, reliability, personal experience, and service all outweigh price every time for me.If State Farm is doing it for you, stay the course! In the larger scheme of things, insurance is a necessary expense of financial planning. Not worth nitpicking or spending too much time evaluating, in my opinion, relative to other growth and expense categories (presuming that current options meet requisite standards within reasonable cost elasticity parameters).
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I have to say increasingly our agent is a disembodied person on a phone somewhere far away. Our agent retired 4 years ago and we don’t have as much of a connection with the new guy.
Funny story: We we’re doing some focus groups for PB Turnovers once upon a Time. We wanted to understand occasions. One woman’s said “These would be perfect when the insurance agent comes over!” There’s a niche occasion!
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yup, same here (albeit not this bad). Know of a colleague that had a relatively minor fender-bender that pretty much rendered the car a total-loss, primarily due to the electronics that are now in cars. It makes replacements of part very expensive and thus premiums go up indeed. Unfortunate side effect of safer cars.
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Wow. I suppose if your car gets hit right in the electronic brain – it is a complete loss. Hopefully the industry has developed a good approach to recycling!
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The electronics and safety features make the car safer, which should reduce injuries and fatalities.You’d think the insurance companies would be saving big time on the injuries, fatalities, and related lawsuits, thus reducing their overall liability. Something doesn’t add up.
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Yes – you would think that would be the case. Makes you wonder. Maybe this is just a ‘cover’ for raising prices – or maybe people’s health insurance kicks in at a point?
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We did a review and switched two years ago when Nationwide went through the roof (after our youngest had a small collision). We switched to Travelers at that time, and they’ve been fairly steady for two years now. We also got a further drop in costs when our youngest left our insurance plan, when she got married last Fall…YEEEESSSSS!! (…There is some light at the end of that tunnel!). 😉
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Most car insurance companies offer a discount when switching, good idea compare quote continuation and switch. Invite you to visit our website: https://www.rfreshinsurance.com/
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