I love my dad. Even though I don’t tell him that enough, I really do. Despite that, he drives me crazy repeating lessons that I learned from him long ago, probably just in case I didn’t really learn them. (Dad, are you reading this?) One lesson I have taken to heart is “Insure against the catastrophe, not the occurrence”. In short, when you buy insurance you want to be the kind of customer insurance companies love. You happily pay premiums for decades and, hopefully, never file a claim. The idea is to have high insurance coverage for the once-in-a-lifetime accident that costs enough to wipe you out financially. For smaller accidents, you share in the risk by carrying a higher deducible. In exchange, your insurance company will give you higher coverage for the same, or even a lower premium. This encourages you to be a safer driver and provides financial protection for a *really bad* crash.
According to Ron Leiber at the New York Times, ZipCar carries a $5 Million liability policy in case one of their cars gets into an accident. If, for example, ZipCar failed to maintain a car properly and as a result it crashes, ZipCar’s liability would be covered up to $5 Million. Sounds comforting, right? The trouble is, that coverage is for the ZipCar corporation, not the individual member. To keep member rates low, they only purchase a measly $300,000 liability policy for the member. I know $300,000 sounds like a lot, but it’s not. It’s barely above most State mandated *minimums*. What happens to your financial future if you crash into the side of a school bus and injure a bunch of kids or run over multiple pedestrians in a crosswalk? These are horrible and unthinkable accidents, right? You’re a safe driver and would never do this, right? But you never know what can happen. Maybe you’ll have a seizure and hit a bus or pass out at the wheel right as you’re heading into a school zone with kids everywhere. You just don’t know…
I purchase an “Umbrella” policy in addition to my auto insurance that covers my family up to $2 Million. That may sound excessive, but at $305 per year for the umbrella policy, it’s relatively cheap compared to the possibility of being wiped out financially. That’s a pretty standard policy and is easy to find from multiple companies. For the “car-free” out there, you may need to search a little harder. So, if you’re using ZipCar on a regular basis, you should talk to your insurance agent about supplemental coverage, because you never know what can happen when you’re behind the wheel.
For the past year, my wife and I have been participating in a trial of mileage based auto insurance from Unigard, called “RateFlex”. The idea behind is to charge for auto insurance by the mile instead of a flat, all you can drive, price. So far, the trial has only involved plugging a little GPS receiver into our cars so the insurance company can tell how many miles we’ve driven… And where, when, and how fast – Normally, I’d find that a little creepy. But frankly, they’re going to know that our cars mostly sit in our garage. When they do go out, they typically don’t drive during rush hour and go for long drives in relatively safe areas at roughly legal speeds. In short, we’re pretty much dream clients for an insurance company. (Did I mention I’ve only had 2 claims in 26+ years of driving – both for rock chips in a windshield? Like I said, dream clients)
The trial has progressed to the point where we now have a new and improved set of GPS receivers on the way along with a quote for what the insurance will cost. The quote includes a “fixed”, or base, price along with a “variable” per mile price. I’ll admit to being a little disappointed that the “fixed” rate isn’t lower and the “variable” rate higher. After all, if my cars are sitting in the garage most of the time, how are they going to be exposed to liability? Either way, the rates are about 25% lower for the amount we drive and it’s progress. After all, why should my wife and I, who drive less than 12,000 miles per year, be charged the same as a similar family that drives 30,000 miles?
We are still in the trail phase and things are still a little rough. I had some difficulty getting documents and I had to submit payment by check – no credit card payment yet. But once the program is ready to go, I’ll be sure to let everybody know – as will, I’m sure, Unigard’s marketing department.