I hate insurance.

Actually, I take that back, I don’t hate insurance. I hate paying for insurance.

Every time I get an email from GEICO or a mailing from Traveler’s, I think about how I pay them every six months and, in the nearly ten years of driving and four years of living in this house, I’ve never filed a claim. At least with medical and dental, I get some regular checkups and routine cleanings (I hate getting a teeth cleaning but I love getting stuff for “free”). Don’t get me wrong, I’d still get insurance even if I wasn’t required to by law, but that doesn’t mean I enjoy paying for it!

So, once a year or so, I have an insurance review day. I get a little antsy and start asking for quotes from other insurance companies to see if I’m getting the best price. (Well, I’ve been more in the “or so” category, I haven’t done this in two years)

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It’s seven o’clock and you’re just leaving work. You’re tired after a long day of work and all you want to do is turn into a vegetable in front of yet another episode of Law and Order. As you walk to your car, you notice someone clipped the bumper and managed to unhinge it from the chassis. It’s scraped, a little cracked, and almost most importantly, since it is the bumped, it looks like crap. The culprit left no note. You are probably out a few hundred dollars of your deductible to get it repaired… fortunately you have an emergency fund… unfortunately, you’ll have to tap into it for this.

That situation is one of any number of reasons why emergency funds are so important. In the situation above, you are likely required by law to fix an unhinged bumper and any visit to the shop will cost you a few hundred bucks. Without an emergency fund, you might resort to a credit card or a short term loan. If you can’t pay that back, it quickly becomes a downward spiral you can’t escape. A minor expense becomes a major expense. But how much should you have saved in an emergency fund? The answer depends on who you ask! Some experts say twelve months of expenses, other will say six months, and even others say “however much you feel comfortable with.” The answer, unfortunately, is that the amount “depends” on you and your situation.

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A classic tip for those looking to lower their cable television bills or their credit card interest rates may work in the world of auto insurance. I was reading a Consumerist post about USAA’s website technical issues and their response to, for a few hours, “losing” a woman’s IRA when I saw this little gem in the comments:

xspook: I had their auto insurance for many years. I decided to shop around and found a much cheaper (over $600 a year savings) policy elsewhere. When I called to cancel, they offered to lower my policy, but couldn’t match the price I got elsewhere. That actually pissed me off, because, as a 10 year loyal customer I should’ve been getting the best price. Now that I tell them I’m leaving, they reward my loyalty with a lower price. Adios USAA. (emphasis mine)

Insurance is a tricky business that I know only a little about. In reading the Berkshire Hathaway Letters to Shareholders, the traditional payout on insurance premiums always seems to be in the 90′s (they make money by investing the float between when premiums are collected and claims are paid). That confirmed something I’ve always believed, that a large component of my car insurance premiums were dictated by risk. Riskier car? Higher premiums. Some accidents or speeding tickets? Higher premiums. Fair enough, that’s why I get insurance, to protect me.

But this little anecdote showed that threatening to leave your car insurance (or any insurance provider) can lower your premiums. I imagine the game that gets played is that all the organizational discounts, good driver discounts and such are up for grabs if a CSR can get you to stay. Who knows?

Either way, shop around for insurance and try twisting some arms to see if you can get a better rate.

When I first started driving, I was amazed at how much car insurance cost. I, like many other newly-minted drivers clutching our licenses, was put on my parents’ car insurance policy, which I’m sure made my parents nervous, and didn’t really feel the full brunt of new-driver-car-insurance-rates. However, when I finally left the nest and had to insure myself, I finally started hoping that 25 would come sooner because everyone says that car insurance rates drop significantly after you turn 25. (I spent all my <21 years waiting to be 21, then my <25 years waiting to be 25… now I’m waiting for retirement… the waiting never ends!)

A few years ago, when I turned twenty-five, I had a great opportunity to test a few car insurance myths empirically and I’m happy to report the 25 year old rate drop myth is in fact very true.

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Everyone’s been focused on brokerage failures and bank failures lately, wondering what happens and who backs them in the event of a failure… that is until we learned that AIG (American International Group) was in serious trouble. This begs the question very few have asked before, what happens if my insurance company fails? The quick answer is that most states have a guaranty that will back the fund up to a certain dollar amount.

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The Consumerist posted some information about rental car insurances and credit cards with a great list of the coverages (based on whether it’s a Discover, American Express, MasterCard or Visa card). I thought that perhaps the individual issuers (like Citi, Capital One, Bank of America, etc.) might build off the base insurance so I did some more digging. It turns out that the auto rental insurances offered by your credit card is secondary coverage, not primary coverage.

When I looked at the list of auto rental insurance coverages for Citi cards, I saw that the basics matched the table on the Consumerist. However, this paragraph stood out for me:

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When it comes to insurance, my approach is that insurance protects you against catastrophic events that would otherwise leave you broke. It’s for covering your car against being totaled, covering your home against that one big earthquake or fire or tornado that’ll level it, and for covering the unforeseen medical emergency where your life depends on you pulling out all the medical stops. It’s like the backstop or net at a baseball game. The ball has to get past the batter, catcher, and umpire before it’ll hit the backstop. In most games it’ll never gets that far, but for the one time it does, I bet those fans are glad that net is there.

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When I was younger, I always thought that there were two things that really made a big difference in your insurance premiums:

• Turning 25,
• Getting married.

Everyone always told me that my premiums would drop when either one of those things happened because they were strong indicators of safety. Right before I turned 25, I recorded my premiums and then compared them to the premiums after I turned 25. I discovered that my premiums fell by a whopping 20% just for turning 25.

So, when I got married to the most wonderful woman in the whole wide world this year, I thought my insurance premiums would fall as a reward for making her an honest woman. As I went to make adjustments to my policy last week, I discovered there was no field for marital status! I’m not a rocket scientist but something says that I won’t be getting another insurance discount because I can’t even tell Geico I got married.

I went to Kanetix, where I did a series of comparisons to see how personal details affected your premiums, and that form had marital status (quite detailed options too) so I’m surprised Geico didn’t care. Is this true for other insurers as well or was I looking in the wrong place?