I got in a car wreck in January. I was at fault in the legal sense, till I die I will insist the accident was caused by the ginger who slammed on her breaks in heavy rush hour traffic. So apparently one wreck and a three year old speeding ticket are enough to get a driver ridiculously high car insurance rates, which I just had to pay.
As a former psuedo-actuary, I can’t help but think that if I had purchased minimum liability insurance when I started driving and put the difference in an interest bearing account I would have come out ahead when I finally had to “pay” out of that account fifteen years later. I’m guessing that after my accident the difference between liability and full coverage would be pretty substantial, too. Of course, my recent car smashings have taught me that even a good driver can get in wrecks and you don’t know when they’ll come.
So if you aren’t risk averse, and you think your a good driver, change your policy to liability. If you don’t have savings, you are risking being out a car if you get in a wreck before the savings account has time to accrue much. If you can swing it, you could seed the account with a couple grand at the get go. If you think I’m crazy, I’d like to point out that car insurance companies not only make a profit, they do it while paying a lot of overhead, both of which come out of your policy. My ingenious plan would put some of that money in your pocket.
To hedge against the risk, you could set up a savings plan with some people you know who you consider good drivers. You’ll need to decide beforehand how to deal with ‘claims’ on this account. Anyone interested in joining the Car Insurance Is For Suckers Co-Op?