Time to Self-Insure for the small stuff?

Mar 17, 2015

Fender dent and scrape

Has regular car insurance become just Major Collision Coverage?

 Imagine you just scraped the side of your vehicle-got a little closer to the garage than you thought.  After the Oh Crap-you get out and find a nice scrape on your fender.  You know right away-this is not good, it’s going to cost you some money and a trip to the body shop.

 You call your insurance agent who starts the claim process and sends you to a local body shop for an estimate.  $1,200-another Oh Crap moment, your insurance deductible is $500 so at least you don’t have to pay the entire $1,200.  You now wish you would have gone with the $250 deductible-but you wanted to save a few bucks and roll the dice.  You file the claim-get your car fixed and all is right with the world again.

 Until-You get your insurance renewal premium and experience your third Oh Crap moment.  Why did your rates go up so much?  You’re a good driver, never had a ticket, always paid on time, only ever made that one little claim and it only cost the insurance company $700-this can’t be right.  So you call your agent, hoping someone somehow made an error.   Nope the premium is correct-that claim you made a couple of months ago-well that’s coming back to haunt you-and it’s going to haunt you for the next 3 years!  You do the math and realize it would have been cheaper to pay the entire $1,200 out pocket and never filed a claim.

 This scenario is why many informed consumers today are “self-insuring” themselves for everything but major collision damage.  Utilizing non-traditional types of body shops who specialize in only minor damage might cost more up front-but definitely saves money over time.  These shops are not equipped to handle big collision repairs and complete repaints making their overhead much lower-allowing them to pass the saving on to you.