Navigating Car Insurance – To Use or Not to Use?

It wasn’t that long ago that my car go into a fight with our parking garage.

It was a the typical 1.5 hour drive home from the suburbs and I was needing a little pick me up. Cue the Pandora playlist…

Chainsmokers was blasting and I was bopping along in my car and prepared myself to make the same turn I make everyday into my parking spot. And then I heard it, the sound of car hitting cement. My stomach dropped. I had done it, I ran into the concrete pillar with the side of my car.

For some backstory, I’ve lived in Chicago for close to four years which translates into four years of parking in hard to navigate and crowded parking garages. For four years I’ve had zero mishaps when parking my car which is saying a lot if you heard of or saw our old parking spot. The birds that used our car for target practice aside, we had to back in our car and there was zero room for error between a concrete wall and large pillar.

But it finally happened, my squeaky clean record was ruined. That was my first thought, followed by:

  • Oh %*#$, I have to tell my husband.
  • This looks like its going to cost a lot of money.
  • There goes our house savings this month.
  • I need to get this fixed ASAP, my car looks horrible.
  • How do I start the repair process?

The Quote

The first thing we (my husband) did after I shared the news along with a picture of the damage (and crying emojis) was call a local repair shop to learn what steps needed to be taken to have my car fixed. My initial instinct was to delay making an insurance claim until I understood how much damage had been done.

We got the quote surprisingly fast after sending pictures of the damage to a shop down the street (technology these days!) and were quoted over $1,600 to repair all the damage.

Back to thoughts three and four, it was going to be expensive and there goes that month’s house savings.

Once we had a better understanding of the cost for the repairs, we had a long discussion between submitting a claim to insurance vs. paying for the repairs ourselves. This was the first time either one of us were in this type of situation. We questioned using insurance in the first place out of fear that our premiums would skyrocket.

Things we considered:

  • Our insurance deductible – $500
  • Our monthly premiums – $109/mo.
  • Our ability to cover all the expenses out of pocket – Yes
  • The need for a rental car – Yes

The Decision

Not knowing the potential premium increase really got in my head but when we broke down the numbers, filing an insurance claim would save us over $1,100 not including potential car rental costs. Even if the premiums did increase $20 or so per month, we would still be dollars ahead in the long-run.

At the end of the day we decided to file a claim with the insurance company. The biggest factor was that I was going to need a car to get to and from work and our insurance coverage included up to $25/day for a rental. Done deal. The car rental could have easily been another $100 dollars out of pocket.

Side note: still waiting on the claim to be reflected in our premiums. Stay tuned.

The Takeaway

So why did I tell you this story? I share it for a few reasons. First, while I am in personal finance and deal with insurance with my clients, I am not an expert in all areas of financial planning. Personal liability insurance is an area I have little experience in which is why I went to my parents for consul on this decision. Which brings us to the second reason I share this story.

When in doubt, go to a resource that has knowledge in that area. It’s okay to not know it all and its okay to turn to parents or other mentors for help. Yes, my husband and I had a good discussion on the pros and cons of filing a claim vs. not but at the end of the day it was the sage wisdom of my parents and sharing their insurance stories that convinced us to use ours.

At the end of the day, you purchase and pay for insurance to insure against the unexpected. In this case the unexpected was mashing my car into our parking space.

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