My auto insurance needs are currently covered by Geico. I’m due for a renewal and noticed a premium increase near $100 which is a bit higher than usual. I contacted Geico to ask why the increase and was told that the increase was due to factors related to rising repair costs.

I decided it’s about time to reassess my coverage to see if there were any changes I can make and potentially save some money on my policy. There was one discount available called the defensive driver discount which required policy holder to complete an online course.

Few years back, I decided to add both my parents onto my auto insurance policy. They are retired so I thought what better way to help your family then to remove expenses off their books. The discount was available for my mother who is over the age requirement to qualify.

So, I decided to give the program a shot. Using the link on Geico, I chose the course by American Safety Council which costed $17.95. The online course required 7 hours to complete with a passing score of 80%.

 

Course experience

• Course took 3 days to complete. Actual time participating in the reading and taking the quiz took anywhere from 30 minutes to 1hour.
• The course is divided in 5 chapters which are easy to read, informative and easy to understand.
• After completion of each chapter, you are presented with a 5 question multiple choice quiz. After the final chapter, you must complete a 20 question multiple choice quiz with a passing score of 80% or higher to complete the course.
• If you do not pass the test, you may retake the course as many times you require.
• Most of the tips offered are all general and common-sense information especially if you practiced defensive driving.

Tips

• Keep the site opened and signed on even after you complete your chapter. The site contains a timer that must run for 7 hours total which are divided among each chapter. You will only be allowed to move to the next chapter once the timer is completed. It’s a waiting game.
• There are no trick questions during the test. If you don’t know the answer to some of the questions, a quick google search will provide answers.

 

How much do you save after completing the defensive driver course?

Geico states on their website that savings of upwards of 5% for 3 years is possible upon completion and approval.

The approval was immediate with Geico. Once the course is complete you simply sign into your account to state that you completed the course through a few clicks and date entry. Discounts on policy were updated on the following business day.

Here is what my policy looked like before the discount.

And after the discount.

A savings of a whopping $7.10! That is 1.2% in savings. Pretty disappointing if you ask me. The policy is for a 6-month term so that would be a savings of $14.20 per year. Assuming the discount will remain around such figures for the next 3 years, that equates to $42.60. Subtract the cost of the course ($17.95) and that is a whopping $24.65 in savings in 3 years!

Vehicle 1 is not covered for collision or comprehensive because the car is worth around $2000-$3000. I drove this car for 20 years! A large part of my financial success rests with this car in many ways. I will write more about that in a later post.

 

I don’t want to discourage anyone not to take the course. After doing some research there are many who get discounts of upwards of 10% with some insurance companies.

The test is so easy I would recommend everyone who qualifies for the discount to take the course and roll the dice on how much you will save.

If you never learned how to be a better defensive driver, you should definitely take the course.

In my case, my premium was already so low, there was probably not much room for further discounts.

 

FIRE Proofing Financial Independence

Life is unpredictable and retiring early carries a lot of risks. I am currently 38 years old and assuming I may live up to the age of 90, that is 52 years my assets must cover. So many things can happen during such a long period of time. So, how do you mitigate the risks of early retirement.

Obvious ways are to purchase insurance and cover the areas of your life where factors not in your control may knock your FIRE lifestyle straight back into the rat race.

In the past, I hated paying for insurance but grew to understand its purpose and value better overtime. Insurance is a beautiful thing.

The plan is to purchase more insurance and increase coverage where needed overtime. Patching away the risks one by one.  For example, risks I may one day get into an auto accident that results in legal and medical costs incurred above the limits of my current liability coverage.

 

Increasing Auto Insurance Coverage

After reviewing my insurance policy, I realized there were some change that could be made resulting from the changes in my current life circumstances.

Bodily Injury Liability. Increase from 100K/200K to 100K/300K.

Emergency Road Service. Coverage removed. I’m not sure why I had this on my policy for so long when I was paying for AAA membership which provides the same coverage and more.

Rental Reimbursement. Coverage removed. Now that I no longer work and commute, the importance of having coverage for rental seems to be of less value to me. In the case of an accident and the car sits in a repair shop, I have no worries of waiting out the repair. I have all the time in the world. In fact, I can simply use Lyft or Uber for my temporary transportation needs. If vehicle 1 is totaled, I have the cash to simply replace the car with another. It’s time for a replacement for my 20 year old car anyways.

So here is my adjusted premium for the next 6 months.

That is an increase by $91.30 from my previous policy. This brings my monthly average auto insurance coverage for two cars to $93.56! I’m quite satisfied with these  numbers but curious if there are others with much lower premiums for similar coverage. Let me know on the comment section below.

 

Umbrella Insurance from Geico

Geico also provided the lowest quote for umbrella insurance by far when comparing state farm, progressive, and Allstate. Geico does have some requirements to qualify for their quotes.

Umbrella Insurance Requirements:

• Minimum coverage for bodily injury liability. 300K/300K
• Minimum coverage for property damage. 100K

Meeting those requirements on my policy would increase my premium from $561.40 to $571.10, which is only an increase of $12.70 for a 6 month policy. That would allow me to purchase their 1 year umbrella insurance for $234.00!

 

What does this cover?

• 1 Million in potential liability claims.
• All 3 people under my auto insurance policy is covered.
• All liability claims from primary home and rental.
• Auto liability coverage total of $1,300,000.

All this for $234! Seems like an amazing deal to me. Especially when you think about the protection it provides for someone who is retired early like me.

So, why am I not buying the insurance yet? I want my dividends to cover the expense. The game is to increase coverage while maintaining or growing my cashflow. Can’t incur additional expenses that will reduce my cashflow going forward. Just a personal life rule.

Soon enough, I will buy myself a nice umbrella just for those rainy days. Soon enough.

Thank you for reading.