Car insurance questions

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Car insurance questions

Post by gravlax » Tue May 15, 2018 7:30 pm

I did not see much in the wiki and am currently searching the forums, but thought I would ask here as well.

Current Situation:

- I had liability only with my old car which was a high mileage 1998
- Bought brand new car for $45K
- Live in SF Bay Area, CA
- Currently insured with Geico
- Safe driver, no insurance claims for 10+ years, no moving violations for 5+ years
- Rent
- Net worth $800K (mostly in retirement accounts)
- New car will be used primarily for commuting, 30 miles each way
- Estimate 15K miles per year

Questions before shopping around:

- How do I choose coverage limits?
- Do I need to worry about protecting my retirements assets in addition to my car?
- Any other gotchas to consider?

Thanks in advance. I am going to read a bit in parallel, but am cautious about what I read online and where it is sourced from. And my eyes also glaze over when I start to read about insurance, my least favorite subject.

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Re: Car insurance questions

Post by mortfree » Tue May 15, 2018 7:49 pm

Buy one share of Berkshire Hathaway (BRKB) and tell geico. They’ll give you a discount (previously stated on this forum by others).

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Re: Car insurance questions

Post by golfCaddy » Tue May 15, 2018 7:53 pm

I would choose a $1M umbrella. That would be large enough to cover most accidents. Take a look at this thread for statistics on auto accident verdicts: viewtopic.php?t=131550. Some people like to follow arbitrary guidelines, 1x or 2x net worth, even though lawyers don't know your net worth. ERISA retirement accounts are protected from creditors in almost all circumstances. Here's info on bankruptcy exemptions: ... ssets.html. You can't buy more UM/UIM than liability. So if you want $500k in uninsured motorist coverage, you need at least $500k in liability. Some umbrella policies will allow you to add excess UM/UIM.

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Re: Car insurance questions

Post by Daryl » Tue May 15, 2018 8:30 pm

Car insurance isn't to protect your assets. It is to restore third parties to "pre-accident" condition to the extent that money can make things better. Think about the potential injuries you could cause with your car. Your insurance coverage provides the first level of coverage (auto + any excess liability policies). Your personal assets need to cover any damage in excess of your policy limits. If you have significant assets, you might be able to "self-insure"; however, liability insurance (including excess liability) is very, very cheap. Buy lots of it!

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Re: Car insurance questions

Post by golfCaddy » Tue May 15, 2018 10:26 pm

People make three arguments for increasing your liability limits: protecting your assets or avoiding Chapter 7 bankruptcy, which would be a pain even if you are judgment proof, being eligible for increased UM/UIM, and ensuring anyone you might seriously injure gets adequately compensated for their injuries. The first two reasons are for your benefit, while the last is an ethical argument.

Umbrella insurance can drop down and provide first dollar coverage in some cases that might not be covered by your auto/renter's policy.

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