conversation: User (Insurance-Tips): "Hey everyone, I’m an insurance producer licensed in 38 states. I’m not here to sell anything, in fact I won’t even mention my company’s name, but I wanted to share some tips on insurance that will save you money, and I thought PF would be a good place to start. The numbers used are examples, so before you make any changes you should consult your insurance professional and/or someone with experience in these matters who can give you answers detailed to your specific situation.\n\n&amp;nbsp;\n\n**Renters Insurance is a HUGE bargain, might not even cost anything.**\n\n&amp;nbsp;\n\nRenters insurance covers quite a few things, including:\n\n* Coverage for your personal content, even if it’s not in your home (eg: items in your car. Certain limits apply for traveling and storage). I typically see this coverage at 10k+\n* Coverage if you are temporarily displaced,( eg: you need to stay at a hotel while your house is being repaired for smoke damage, money to replace lost clothes, increased food expenses because you’re eating out every day since you don’t have a stove, etc.) I typically see this coverage at 30% the above number\n* Coverage for liability (eg: someone falls in your apartment and breaks their leg, sues you for negligence). I typically see this at 300k\n* Coverage for your defense costs (eg: lawyer fees, small allowance if you need to miss work to attend court hearings, etc.) This is included.\n\nAnd how much does this coverage cost (including the numbers I used above)? Usually under $200; I typically see 150, but I have seen it go as low as 90. PLUS, if you bundle your renters and auto, sometimes the discount on auto will cover the renters (eg:$200 savings on auto, renters cost 150, net savings: 50.) Call your auto insurance, ask if they have renters. If it’s too much, say thank you and call the next agency.\n\n&amp;nbsp;\n\nWhat would a worst case scenario look like? Well, try /r/legaladvice, browse around for a bit. For the lazy, imagine you accidentally start a small house fire while cooking. It damages a few thousand dollars’ worth of your stuff, plus you have to live in a hotel while it’s being repaired, and your landlord is going after you for damages because he has to pay for the repairs. If you don’t have renters insurance, you’ll be paying all of that out of pocket. Oh, but if you DO have renters insurance? You’re paying the deductible (typically 250 or 500), and then letting your claims adjuster deal with everything else. Have to take time off work to go to court to prove you’re not negligent? They have you covered.\n\n&amp;nbsp;\n\n**Higher Deductibles will save you more money, especially over the long run**\n\n&amp;nbsp;\n\nGeneral rule: At LEAST $500 deductible on your auto, preferably $1k. For homeowners insurance, it’s best to go with at LEAST $1k, preferably 2.5k or even 5k. Renters can get away with 250 or 500, honestly.\n\n&amp;nbsp;\n\nWhy?\n\n&amp;nbsp;\n\nThe difference is usually several hundred a year, and you pay the deductible before the insurance pays anything. \n\n&amp;nbsp;\n\nI go into this a little more later, but say for example your insurance is 1500 a year with a 1k deductible, and 900 a year with a 2.5k. After 4 years, with a 1k deductible, you’ve paid 6000 to the insurance company, and then you’ll have to pay another 1k in the event of a claim. After 4 years with a 2.5 deductible, you’ve paid 3600  to the insurance company, and put aside 2400 that would have gone to the insurance company, so basically covered your deductible. One more year, you can use the $600 you’ve saved to cover the deductible with $500 additional savings to do whatever you’d like.\n\n&amp;nbsp;\n\n**Insurance should only be used in an emergency/making claims will increase your rates**\n\n&amp;nbsp;\n\nThis is the one that gets people the most. You pay 1500 a year for insurance, you’ve been paying the last ten years, so why shouldn’t you make a claim when you’ve already paid then 15k? Because it’s going to raise your rates.\n\n&amp;nbsp;\n\nWhy?\n\n&amp;nbsp;\n\nIf you don’t make any claims, you’re put in a group, “unlikely to make a claim”. Because you’re in that group, you get more favorable rates. If you make a claim, you automatically switch to a different group, “likely to make a claim.” Because you’re in this group, you’ll get less favorable rates. On auto, it will last for 3 years; on home, five. It doesn’t matter if you haven’t made a claim in your entire LIFE up until this point; as far as the insurance company can see if, you’ve made a claim and will be much more likely to make another.\n\n&amp;nbsp;\n\nFor example: Let’s say you have a 1k deductible.  Someone breaks into your car, steals your purse worth 1500. Personal property is covered by your home/renters, so if you make a claim your home will pay out $500 (cost of loss-deductible). They now see you as riskier, so they will increase your rates. Maybe $300 a year for the next 5 years; you’ll pay $1500 over the next five years, plus you’ve already paid the $1000 deductible, so now you’ve paid $2500 for a $1500 purse. In this case, it will cost you less to just buy a new purse out of pocket.\n\n&amp;nbsp;\n\nOn the other hand, if you have a kitchen fire that does $30k in damage? Yeah, make a claim on that one.\n \n&amp;nbsp;\n\n**Most vehicles don’t need “full coverage”**\n \n&amp;nbsp;\n\nUnless A) Your vehicle is financed, then it’s required by your financing company, or B) Your vehicle is less than 10 years old, then your vehicle will pay out more. \n \n&amp;nbsp;\n\nWhy?  \n\n&amp;nbsp;\n\n* Full coverage isn’t an industry regulated term. Professionally, it means nothing. It usually includes collision and comprehensive coverage; some companies will also throw in towing, glass, and rental.  If you ask for full coverage, you could be getting anything.\n* Your policy will typically only pay out collision if you’re at fault. If the other driver is at fault, their insurance will pay out.  Comprehensive does cover more, so you can get away with having comprehensive (vandalism, theft, tree falls, hit deer) but no collision (you hit object)\n* We will only pay out what the vehicle is worth. Not what it costs to get a new vehicle of this type, not what it costs to get a used vehicle of this type. Doesn’t matter if you paid $35k for the vehicle 10 years ago, doesn’t matter if it costs $15k ro replace it today, we’re only going to pay out the Actual Cash Value, and it typically isn’t 15/35k on a 10 year old vehicle (Much more common is less than 5k)\n* You actually end up paying the company more than it would pay you in the event of a claim, because “full coverage” costs more than liability only.\n \n&amp;nbsp;\n\nFor example:\n\n&amp;nbsp;\n \nLet’s say you have a buy a vehicle in 2001 for $20k. ACV is 3k. Your insurance is 1000 liability only, 1500 with collision and comprehensive, with a 1k deductible. Over the course of 4 years here’s what your insurance totals will look like:\n\n&amp;nbsp;\n \n&amp;nbsp;|Liability only | Full coverage\n----|----|----\n1|	1000|	1500 (500 extra)\n2|	2000|	3000 (1k extra)\n3|	3000|	4500 (1.5k extra)\n4|	4000|	7000 (2k extra).\n \n\n&amp;nbsp;\n\nLiability is what you have to pay anyways, so unfortunately there’s not a lot you can do to get around that. For the collision and comp, you’ve paid out 2k extra over the years. If you have an accident right now, the ACV is 3k, minus deductible (in this case 1k). So the most they’ll pay out is 2k, which is the amount you’ve paid them, so you break even. Ever year after that that you don’t have an accident, you’re paying them money that you will never get.\n\n&amp;nbsp;\n\n\nThe exact amounts vary, which is why I have the general rules A and B above. If you’re not entirely sure, find out the rough value of what your vehicle is worth. Price liability only coverage (that’s coverage if you hit someone), and liability+ collision and comprehensive coverage (coverage if you hit someone, and also for your own vehicle).  Take the rough value of your vehicle, subtract your deductible, this is X. Then take (the price of your quote with collision and comprehensive) and subtract (the price of your quote with liability only). This is Y. X divided by Y is how long it will take you to “break even” if you were to have an accident (although this is obviously not the goal).\n"
  Self: "&gt; We will only pay out what the vehicle is worth. Not what it costs to get a new vehicle of this type, not what it costs to get a used vehicle of this type. Doesn’t matter if you paid $35k for the vehicle 10 years ago, doesn’t matter if it costs $15k ro replace it today, we’re only going to pay out the Actual Cash Value, and it typically isn’t 15/35k on a 10 year old vehicle (Much more common is less than 5k)\n\nInteresting because GIECO paid us "Fair Market Value" on our car, basically just prices on the exact same car from dealers around us. And since dealers always overprice cars we got good value (almost what we paid for it two years earlier).\n\nAlso what about uninsured motorist coverage? There are a lot of illegal immigrants who drive without insurance in my area, and have very little money. What would you recommend for that?"
  Old_Man_Of_The_Sea (Old_Man_Of_The_Sea): "Different companies have different policies, and you always have the option of turning down the settlement.  They will almost always try to get you to take a lower number, which is literally their job.  If the company was handing out whatever people asked, they wouldn't be doing their best to make the company money, and stockholders money.\n\nThe trend towards fair market value is a good one for the consumer, however, you can bet that the increased payouts aren't being compensated by a lower bottom line for the company.  They are just passing these costs along to the consumer.\n\nI think his major point, and something that a lot of people don't realize is that the payout is (and should be) what it costs to get a replacement of the same value.  This is usually the case with any auto related policy, and as stated above, money companies will low-ball you with kbb trade in values.  Oddly enough, this doesn't usually transfer over to home owner's insurance.  If you have a ten year old iMac get stolen from your house, you might just get back enough from an insurance claim to go buy a new iMac."
  