Unlike what many people seem to think, the purpose of auto insurance is not to reimburse your expenses next time you ding your car pulling out of a parking spot or get into a minor fender bender. The purpose of all insurance - car insurance included - is to shield you from the worst of catastrophic financial damages in the event that something goes horribly wrong.
Here is a tragic but appropriate example to illustrate this point. About three years ago one of my colleagues at work had a terrible accident while trying to drive his car across an intersection while the light changed from yellow to red. He escaped with some minor injuries but the elderly driver of the other car was not as lucky. He was severely injured, hospitalized for a long time and eventually died of his injuries. A horrible story no doubt. My colleague was understandably distraught over the incident. As if the emotional and physical toll of the accident were not enough, my colleague also had to deal with the legal and financial consequences of his mistake.
In most cases the real financial costs associated with such major accidents are not the property damage - unless you completely destroy a Lamborghini the costs of buying new cars are relatively manageable. The real costs are the medical and financial losses potentially incurred by anyone injured in the accident. These can mount into the hundreds of thousands of dollars, and sometimes even more, more than enough to bankrupt the average family.
All this leads me to the main point of this post. If you accept the proposition that the purpose of insurance is to shield you from large, catastrophic costs, the correct strategy in buying car insurance is to go with those policies that offer you high coverage limits. Of course such policies can be expensive, and a way to mitigate these costs is to accept higher deductibles which will reduce your coverage in the event of minor accidents which you can afford to handle without reimbursement from your insurance company.
If, like me, you dislike shopping for car insurance and have been using the same car insurance company for a long time (in my case it's AAA), you may want to do some shopping before you next renew your policy. If you are looking for a place to start, you can take a look at this list of car insurance companies. Safe driving to you!
. While the TiVo cost us $389 (there are much cheaper TiVo models available on Amazon), on an ongoing basis the service is cheaper. The TiVo service costs $10 per month when paid annually, and the cable card needed to connect the TiVo to cable service costs $1.7 per month. At the end of the day, our cost is reduced by $4 per month compared to what we were paying for the Comcast DVR. To be honest, savings of $4 month would ordinarily not be sufficient incentive for me to take action, but I have had my eye on a TiVo for a long time. The reasons:
and bought my own on Amazon for $80. With a monthly reduction of $5 per on my Comcast bill, this transaction has a break-even time horizon of 16 months. Good enough, I guess.
friendly, something which I appreciate very much. The plan offers no matching - is it just me or are employers completely walking away from the whole matching thing? And it offers only a small number of investment options, most of which are dismal. The only good option, as in my own plan, is a low cost total market index fund. No other index options whatsoever. Because of this severe lack of desirable options, 70% of Alpaca's retirement savings will go into that index fund, with the rest split evenly between mediocre and expensive international, bond and real-estate funds. Readers take-heart, I will make the necessary adjustments to the rest of our portfolio to ensure that our asset allocation remain appropriate.