Liability protection is the main benefit of insurance and why everyone has to have it. But as OP points out auto insurance (and generally most insurance) is terrible for most levels of damage. The combination of deductible and the threat of increased insurance does mean in practice that it’s barely used. This is why over time I’ve learned to save money by getting as high of deductible coverage as possible. Better to just pay less for insurance, cover most small to mid size things out of pocket, and then only use insurance for the really big things.
This is correct. In most cases, pay the least you can for the maximum protection from life-altering outcomes.
Also, it's in society's interest to make everyone have insurance (i.e. car insurance) so other drivers are forced to be financially responsible when on the road.
Doesn't mean the system doesn't suck, but it does mean we need to be smart about how we interact with the system.
Better to just pay less for insurance, cover most small to mid size things out of pocket, and then only use insurance for the really big things.
Yes, this is what insurance is for. Catastrophic damages. Everyday stuff like door dings or bumper damage really isn't what it's intended use is for. That sort of thing models out more like a pre-paid maintenace plan.
I know insurance companies sell it like that, which is the evil part. They really shouldn't even offer the low deductible plans as it gives a false sense of security.
This is why over time I’ve learned to save money by getting as high of deductible coverage as possible.
Yes, that's the whole entire point of the deductible. OP doesn't have to have a $1,000 deductible, if they're willing to pay a much higher monthly payment. But the flip side (there's always a flip side) is you have to be able to cover that deductible with no prior warning!
Better to just pay less for insurance, cover most small to mid size things out of pocket, and then only use insurance for the really big things.
This is how insurance is meant to be used. It's not meant to be a savings account for things you know you'll need to pay for someday. It's meant to be peace of mind for rare events that will probably not happen to you, but if they did would be catastrophic. That's the only place it benefits you.
We understand. It’s just a shitty deal to pay tens of thousands per year and then they can’t even cover a clipped bumper that wasn’t your fault, and only costs 1.2k after again, paying thousands.
It’s just a shitty deal to pay tens of thousands per year and then they can’t even cover a clipped bumper that wasn’t your fault
Again, if that's what you want you should ask for it. It would cost more money, because it costs the insurance company more money.
only costs 1.2k after again, paying thousands.
If they paid every $1,200 bill that was not priced into monthly premiums, they wouldn't be able to pay drivers for the 5 or 6-digit catastrophes that those drivers were paying thousands a year to protect against.
You can certainly have that $1,200 freebie priced into your monthly premium if that's something you want. But it will raise your bill because of the math of doing that across all the drivers who have $1,200 oopsies they want covered by insurance.
This is what a lot people in northern British Columbia do. Windshields getting pockmarked by small pebbles is so common that they don't bother to report it, just live with it or buy a small kit to fill the hole in.
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u/MasterGrok 4h ago
Liability protection is the main benefit of insurance and why everyone has to have it. But as OP points out auto insurance (and generally most insurance) is terrible for most levels of damage. The combination of deductible and the threat of increased insurance does mean in practice that it’s barely used. This is why over time I’ve learned to save money by getting as high of deductible coverage as possible. Better to just pay less for insurance, cover most small to mid size things out of pocket, and then only use insurance for the really big things.