Musings From An Ignorant Insurance Buyer

A recent car accident (no one hurt, thank God!) has me nonetheless pondering whether we should rethink the whole idea of car insurance.

I have a good agent-and the service was decent, but the lingering thought I have is that the REAL reason for insurance is to keep yourself from being wiped out financially if a CATASTROPHIC accident happens. Aside from that, there may be a case for not keeping any other kind of insurance on your car. Hang on to the Liability portion-and consider discarding the Collision and Comprehensive parts…

Why?

Using my family’s accident as an example, here’s my reasoning:

The damage to my car was about $6,000. After the deductible of $500, the “betterment” charges of $400 that my insurance company would not cover-because some of the parts replaced on the car made it “better” than before the accident (HUH?—aren’t ALL replacement parts newer than what existed before?), my out of pocket expenses will be about $900. OK, you say, but the insurance company will pay the remaining $5,100.

True, but if my premiums increase as a result of the crash (as most insurers will jack up rates), isn’t it true that I am really just FINANCING this crash? Over time, the increase in my premiums paid as a result of the accident may exceed the $5,100 paid out in MULTIPLE fashion. Perhaps I would be better off just taking out a bank loan for the cost of the repair—and at least I’ll know the EXACT cost of the accident (loan plus interest)

I’m no insurance expert, but I do know the profits “earned” from the insurance industry are no….accident.