Friday, May 6, 2011

Car Insurance Changes Again, Part 2

This post was included in this weeks edition of the Totally Money Blog Carnival, hosted at Prairie EcoThrifter! Thanks for including us!

So a week or so ago I opened my car insurance bill and was delighted to see that my "fees" seemed to have gone down for my insurance premium. We think its because i'll be turning 25 in a few days and that is considered a milestone in the land of car insurance. So we joyfully recalculated our budget and were delighted to see that the monthly amount we needed to save was a bit lower...

So imagine my surprise when South County Boy went to the mail and we found HIS car insurance bill there too... and his premium has gone down as well! Maybe there is something to celebrate after you turn 21?

So my car insurance is now $363.75 every 6 months (about $60.63 a month) and South County Boys insurance is now $199.53 every 6 months (about $33.26 a month).

Just last month my mom got hit by a hit and run and lost her front bumper and had some other damage done to her car. She was okay physically (naturally shaken up) but one call to AAA and her car was in the shop, she was driving her free rental, and she was only out her $250.00 deductible. In California, having good insurance is essential... No one even pulled over to help her despite multiple witnesses.

We have our insurance through State Farm. We keep our deductible a bit higher on my car ($500.00) which makes our monthly payments more affordable. Insurance is for emergencies... not to limit your costs completely... and since we don't get in an accident every month, or year for that matter, we would rather have a lower monthly payment and a higher deductible since it should save us money in the long run.

We also don't have a free rental car on our policy like my mom has. We figure since we are a 2 car family, my fiancĂ© could always drive and drop me off at work in his car and I could take the bus home if need be. Yes, its a bit of a hassle to wait for the bus and take it home, but knowing all of our transportation options saves us from renting a car...especially since a monthly bus pass is cheaper than a one day rental car. We keep road side assistance on my fiancĂ©s car because its more likely to break and its only $3.00... but I have AAA for mine so we don't include roadside assistance on my car insurance.

To continue my mom's story, because her vehicle is older, 1996, and in their minds isn't worth the $3,500 to have it repaired because she has over 100,000 miles on it... they are "totalling" her car... How does this relate to us? well, my fiance's car is a clunker. Its a 1991 and isn't pretty by any means... but it runs... and in the event of any accident, his car would be "totaled" on first glance let alone inspection, so we don't need to spend the money to fully insure his car. We keep him covered if he hits someone else, especially since I have a condo... and for medical in case he's hurt, etc... so this keeps his premium lower because we aren't paying for services we would get in the event of an accident... (it also helps that he doesn't have a point on his licence for that stupid stop sign that I didn't fully stop at...).      =/

So, monthly for both of our cars we need to stick about $94.00 into savings each month so we aren't hit with a nasty bill. Since we are also homeowners, we have a few more insurance bills that we need to pay... but those are bills we pay annually. Here's the break down:

  • Homeowners insurance is $322 every 12 months (about $26.84 a month)
  • Earthquake insurance (cause we live in CA and the big one is coming) is $261 every 12 months (about $21.75 a month)

So for those 2 annual insurance bills we need to save around $49.00 a month to again not be surprised by a nasty bill in November, right before the holidays. So we need to save $94.00 for the cars  and $49.00 for the house... which works out to $143 a month that we need to save up towards all our insurance bills! Right now our insurance "sub" savings account at ING DIRECT has $839.60 in it, before May's deposits are made.

We will take $563.28 out of the account to cover the 2 bills that are due now, and leave the $276.32 in the account to cover the Homeowners and the Earthquake. Since we are half way through our budget cycle, we also check on the account in the account to make sure we haven't had any math errors along the way. We should have $49 x 6 months saved in the account... so we are actually $17.68 short of what we should have in the account at this point ($49.00 x 6= 294 minus what we have, makes us short $17.68). So we will need to add that in this month to make us balanced out.

But now we only need to pay $143 a month! Woot Woot!

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