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Car Insurance Risk and Reward

Automobile windscreen displaying "spiderw...
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Please Note: Less insurance isn’t always a good thing.  Often, it can be terrible.  It is up to you to do the math and figure out what your insurance needs are.  If you are ever in doubt, then more coverage is better than less!

Yesterday, while driving to work, I was driving behind a dump truck.  I tend to give these large trucks their space for a number of reasons, but one of my big reasons proved to be very real.

Dump trucks like this tend to carry things, it’s in their nature, and the one in front of me happened to be carrying rocks.  I was driving behind it at a safe distance, not knowing that it was carrying rocks, when one fell out, bounced off of the road, and hit my windshield.

This left me with a star-shaped crack in my windshield that is about the size of a dime.  I know that these can get much worse if left unrepaired, so I now need to figure out what to do.

The Available Options

There are only 3 options in this situation:

  • Leave it as it is.  This is a terrible option.
  • Call the insurance company to see if it is covered
  • Get it repaired on my own

My Insurance Background

To better understand the thought process that I’m about to outline, you need to know my insurance situation.  I don’t pay for comprehensive or collision coverage.  I’m a safe driver and the math doesn’t work out well enough to justify the additional monthly premium.

Option 1: Leave it alone

This is a terrible option just because the problem can easily get worse, and result in needing an entirely new windshield.  While it might save some money in the short run, it will be disastrous in the long run, it must be fixed.

Option 2: Call the insurance company

I am insured by a large insurance company that frequently advertises getting cracks of this size fixed for free.  I already know that this is probably not applicable to me because of my coverage.

I called the company and they confirmed that I needed comprehensive insurance coverage to qualify.  Comprehensive and collision coverage (they are both required together) would cost an additional $60 a month for $100 comprehensive deductible, and $1,000 collision deductible.

We must keep in mind that the repair would be free, so the deductible won’t play a role in the math for this particular issue.  I’ve had my car for 3 years so far without comprehensive or collision coverage.

Option 3: Get it repaired on my own

This is actually my only real option being that insurance won’t cover it.  I got some quotes and it looks like it will cost anywhere from $80 – $109.  This may sound like a lot, but in the long run I do come out ahead.  I’m also researching repairing it myself.  I don’t have much experience in this, but I didn’t have much experience when it came to refinishing our chandelier, and that turned out great!

Why Less Coverage Was Better

If you’re unfamiliar with risk reward, the idea is that for a given amount of risk, there should be a given amount of reward.  This will vary from person to person based on your risk tolerance.

I chose to avoid comprehensive and collision coverage because I felt like I’d be better off without it.  My car isn’t worth a lot, and repairs for it will generally be inexpensive because it is a very basic vehicle.  I’ve also got about 87,000 miles on it.  This saved me $60 a month for the last 3 years, which comes out to $2,160.

Naturally, that came with a risk: certain things I must pay out-of-pocket.  If I had crashed my car right away, this would have been a bad decision, but I didn’t do that.  Instead, I haven’t had to pay anything out-of-pocket for 3 years, and I haven’t had to pay for the coverage.

With this $109 out-of-pocket, I’m still ahead by $2,051 (not including interest, etc.).  I highly dissuade playing russian roulette with insurance. Only cut coverage when you are nearly certain it’s a good idea.  For me, it was the right decision, and it has paid off.  Now, I just need to find the time to get this thing fixed!

What are your experiences with weighing the pros and cons of certain insurance coverage?  Has it ever come back to haunt you?

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