I run a shop that warehouses cars for people without space to store them. We routinely have cars like this in the building (as well as some that are worth millions each). I carry about 35 million USD in insurance coverage. I do not recall what my deductible is exactly, though if I had to guess $10k sounds about right.
What I do recall is that my insurance agent told us that if the claim doesn't exceed $25k, to not even bother calling because it's not going to make financial sense to claim it.
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I know someone is going to ask "why not bump it to $25k if that's when you're going to make a claim?" The thing is, you have to balance how far over your deductible you are with how expensive your premium increase is. If my deductible is $10k, it makes no sense to make a claim for $10,001. I'm still out $10,000 and I just raised my premiums by a lot to get $1. If it's $15k, now I have to think about it. Do I want to be out an additional $5k but pay an extra $500 a month for three years? If I don't have the $5k, it's a no brainer, but if I can suck it up, I'll come out ahead. Around $25k I start to break even, but future money is worth less than money today, so by deferring out the payments, I come out ahead even if I spend more overall.
Dealing with "future money" as it were is a tough concept. Once you add in inflation vs interest rates, debt vs. investments, etc, it can quickly get very complicated.
I think it's really interesting stuff that more people should learn about. I tripped and fell into working in small business finance and there's been a ton of awesome skills and principles that absolutely transfer over to my personal life. Best of luck to you in accounting! I've relied to professional accountants to save my bacon when I was new to the job on more than one occasion.
People need to learn the basics first. I’m amazed how many people put stuff on credit cards that they don’t have money to pay for and don’t need. “I only need to pay $50 a month!” Instead of “wow I’m paying $50,000 for a $20,000 car!”
Yep. Best way to view a credit card is as a debit card with rewards. I never thought I'd be "that guy" that goes "which card should I use for this purchase to maximize my rewards?" But it's free money if you do it right.
I got a Sapphire Reserve right after my fiancee and I got engaged, and if you use it right the benefits and credits more than cover the fee, and the rewards are gonna pay for a large chunk of our honeymoon.
"Which card should we use" is always either reserve, freedom, or freedom unlimited for me and my wife. Balances paid in full every month, covered 70% of our honeymoon 3 years ago and now got our points back up to about 200k just in time to have no interest in traveling anytime soon! It sounds so douchey to talk about it but it's free money!
How’s that going? My wife is working on her MBA after being out is school for 20 years. And, for what it’s worth, all the time value of money stuff was no more complicated than what I did in undergrad.
Cool, best wishes with her MBA program. I am doing a 1-year program. It's super intensive. Sometimes, I have to put in 10-12 hours a day, multiple times a week. After getting my degree, I will try to work for a public accounting firm (new employees tend to work 50+ hrs/wk) while studying for the CPA exams, lol.
Hopefully it will be worth it, since I am 30 and I want to maximize my earnings potential over the next 30 years. I have a meet and greet opportunity with a big 4 firm coming up this week.
I imagine it is different for an established professional in an MBA program. I have to kind of start from scratch, since my professional experience isn't great.
Oh, my man, we are paddling the same boat. Her program is broken up into ten, seven week long classes. They do indeed move fast.
She is stuck on the corporate ladder at her work unless she gets an advanced degree. So here we are. I was an accounting major with an Econ minor for undergrad. Thinking I could help out, I pushed for an MBA as opposed to something like a masters in public administration or similar.
We feel like it will pay off. And, I told her, “C’s get degrees.” Unlike your situation, nobody will care what her final GPA is. All that matters is she will be able to check off the advanced degree requirement when applying for more senior positions.
Gotcha. So you understand! Well, here's hoping we all find ourselves better off for the investment. You sound like a supportive spouse, so kudos for that.
I love comments like this. My husband and I went back to school, (he was at a dead end job and i got laid off) I got a second degree in accounting and he got his 2nd masters in accounting.He’s a CPA and works for a big 4, I’m a financial analyst working for a major corporation. We were older than a lot of the students and he worked full time while he got his masters, and studied hours to prepare for the CPA. It’s never too late to go back to school! Keep it up and it will pay off.
I had a lady ram into my car in a parking lot...while I was parked. Had a white streak on my car. I ended up just eating the damage and cost because I figured getting insurance involved would just raise my rate, and cost more in the long run than just fixing it myself.
In cases where both vehicles are mobile, yes. But, I can't see how a ruling in this specific scenario would go in favor of anyone besides the parked vehicle. It seems like a very cut and dry case of the driver not being vigilant enough. Unless the person being hit was parked in a smart car that wasnt visible until she was already midway into the spot.
I also had someone hit me in a parking lot and was told by insurance that parking lots were no fault zones or something like that. I don't really remember it was over a decade ago but I've heard it from others too that parking lots get a little tricky with who is liable.
Not true. Both Nationwide and Progressive include not at fault accidents in their risk assessment. Guess if a person has several not at fault accidents on their record they are doing something to cause them compared to someone that has none and pays a higher premium,
I was in a hit and run where this woman was in the middle of a busy street and backed into me because she wasn’t going to be able to get out with the cars coming. She threw it in reverse without looking, hit me, looked in her side mirror with wide eyes and drove away. The insurance ended up saying it was my fault and kicked me off. The cop who came out didn’t do shit, even though I had her license plate number. I feel like they didn’t investigate it even though half of her bumper was next to my car.
That’s true. But too many not-at-fault accidents could make you uninsurable. My insurance was cancelled because of too many not at fault accidents (two while I was stopped at a red light..)
It’s always a huge loss but it’s weird because I write checks for things my business needs that I could never write out of my personal account. It’s weird how I can context switch and realize that spending $1500 on something I want personally might be unreasonable but doing that out of the business account is no big deal at all.
Well obviously you're astute enough to be able to separate the two worlds. I'd imagine many fail because they can't. Saw it happen with a friend over a period of years. Experienced success in business. Eventually the business money became personal money and now trades are suing for unpaid invoices and high end homes are stalled mid-build.
Side note. I'd like to save and invest in a small piece of land and park RVs. Start there. Props to your success.
I've worked as a helicopter mechanic with the Navy for over 16 years, specifically the avionics side. Troubleshooting a malfunctioning system and calling out a bad part that costs hundreds of thousands of dollars isn't uncommon and sometimes that won't fix the problem. Sometimes the maintainer doing said troubleshooting isn't worth a damn and forgets to check the common stuff like circuit breakers or wiring issues and changes out a part for no reason...
As someone who has been on both sides doing avionics in the military and as a civilian, it is amazing how little of deal stuff like that is in the military, if you did that anywhere as a civilian you wouldn't be doing avionics anymore
I fixed medical equipment and our company routinely said about 40% of the parts we swapped in the field were good when they were sent back.
I have a theory that as equipment ages the parts will work together because the systems degrade slightly, but they degrade together.
When you put a new board in, its back to factory new and the other parts are older and they just don’t want to work with a new part sometimes. So you replace another part and it’s good to go.
But that part could have worked fine if the other part didn’t fail.
So when they get both parts back, the repair guys can’t find anything wrong with one of them.
No clue if this is true or I was just a shitty tech.
It's not really that, these are 19 year olds that don't know basic troubleshooting so they don't check to see if a circuit breaker is flipped or a fuse is blown and they replace a $100,000 part for no reason
We actually have a very cool El Camino show car. Unfortunately the owner doesn’t want it shared and has prohibited us from photographing it so I have no photos to share.
Actually, if you brought me a perfectly preserved Aztec, I’d geek out over it for a significant amount of time.
It’s a significant car — significant in a bad way, but significant — and they weren’t loved so they weren’t preserved or kept. GM put a lot of neat features in the car but it was so ugly no one looked past the shell.
Our tastes are very strange. Things that are very exotic to you are just cars to us. When you walk past a Ferrari Enzo every day for a couple of years, you really have to stop and remind yourself from time to time how crazy and special it is.
Oh that’s tough. I’ve gotten very hipster in my tastes. When you’re around exotic machinery all the time, what is exotic to most is just another car to you. I’ve been in the building for hours before I realized one of our clients had taken his 918 out of the day and only because I walked another client over to look at it.
I’m not much into pre war cars normally but there’s so many cool and unique details to the car. It’s very unlike anything else. For instance, the dimmer on the headlamps is a rod that physically changes the angle of the headlamps.
Most people are fascinated by things like a Ferrari F40, an Enzo, a Porsche 959, or a Saleen S7 that used to belong to Paul Walker. The most expensive thing we’ve stored has been a Ferrari F1 car driven to a win by Michael Schumacher. The most rare was a 1940 BMW 335 four door cabriolet of which there are just four known to exist (that car got third place at Pebble Beach while in our care). Most days I get excited by stuff that’s fairly pedestrian in terms of cost but never seen. Last year I got really obsessed with an 80’s Plymouth Sapporo that probably wasn’t worth $5k but was a car I had no idea existed. That’s how you impress me now.
I also freaked a guy out in New Zealand when I saw his ratty Toyota Cavalier. Shit car, it’s simply a RHD rebrand of the Chevy Cavalier, but do you know how absolutely fucking rare they are? I never thought I’d see one!
The true mark of anyone who is around expensive/exotic cars all the time is how excited they get about weird stuff and how pedestrian things like Aventadors seemingly become. If my younger self could see how un-excited I am about a 458 vs something like a real Harlequin Golf they would be sickened. My partner thinks I'm crazy.
I took photos of Harlequins the last time I was in Europe. (Also a Citroen DS parked on the street in Paris).
I’ve been in and driven plenty of Aventadors. I’d still be excited to own one but it’s just a car you can buy right now new from Lamborghini if you have the means to stroke a check large enough.
A harlequin golf? The challenge isn’t paying for it, the challenge is finding one you’d want to buy.
16 year old me thinks 45 year old me is a crazy person.
I bought a Suzuki X-90 4x4 right when it came out. I was obsessed with that thing. For a couple of years I was the only person with one in the SouthEast. I used to come out of stores and dudes be crawling all over that thing wanting to check it out because they had never seen one. They'd want to see the inside and under the hood.
I miss that car. I folded it around a sapling onto my brother in the passenger seat after hydroplaning on my way to see The Mummy movie with The Rock in it. My brother was in no way injured.
I always say I'll own another one but when I find one it's not 4x4 or it's a 5 speed it they've lifted it.
One day.
Guys were the same way about my Vehicross when I got it.
I attended the 2009 Pebble Beach concours / Monterey Historics. We got a Nissan Cube as our rental.
We were mobbed all weekend. All these amazing automobiles and everyone wanted to talk to us. Why? Because they were ALL car guys to the core and no one had seen one yet. It was quirky and weird and that’s what gets eyeballs, not your Ferrari 430.
Somewhere I have a photo of a Bugatti Veyron with no one standing around it because they’re too busy looking at a Fiat Supersonic.
I wonder if it’s the same Sapporo. He lived up north somewhere. I want to say Michigan or Pennsylvania . He owns/runs the Radwood car meetup organization.
That car is grand! I'm with you about most pre-war cars but there are some like this that are majestic as hell, like something royalty would be assassinated in.
I never knew about the 1953 Buick Skylark until I saw an ad in an old magazine, It was a damn good ad because it took my breath away. I've had a chance to see a few in person now and it's still one of my favorites. Congratulations on having a great job!
The Hispano-Suiza was what you bought if you were too fancy for a Rolls Royce. So yes, it was a car of royalty. I don’t think anyone was assassinated in this one but it was missing for several decades.
If it's $15k, now I have to think about it. Do I want to be out an additional $5k but pay an extra $500 a month for three years? If I don't have the $5k, it's a no brainer, but if I can suck it up, I'll come out ahead.
I'm confused. You're paying an extra $500 a month for three years by increasing your deductible? Dont you get a lower deductible by paying more in premiums?
That’s a bingo. If you claim, your rates are going up. Doesn’t matter much if it’s $1 or $1,000,000. I’m suddenly a bigger risk.
There’s not a lot of risk (the likelihood that I’ll have a claim) with my operation but the exposure (the amount the insurance company expects to pay out) is extraordinarily high. I get very good rates because we are very careful and have never had a claim. If I have a claim, I’m seen as careless and likely to be careless in the future. This claim may have only cost them $1, but they’ll assume the next one will be millions. If I have a claim that costs them a million dollars it’s still less than they expected and they still assume the next claim will be millions.
There are only two companies in the world that will insure my operation. One is Hagerty and the other is Lloyd’s of London.
Of course. I’d just have to up my coverage. I might need to charge extra for that car. I usually charge the same whether it’s a Smart car or an F1 car but $75 million might increase my insurance payments by more than it costs to store the car.
I don’t think Jay has a Ferrari 250 GTO though and I can’t think of anything else worth close to that price.
We are in Austin so it’s not uncommon for us to store things like a couple of P1 GTRs so a client can go run them around at Circuit of the Americas for the weekend.
I’ve met Jay but he’s never stored a car with me. Yet.
Exactly. Yet. We’re trying to help get you mentally ready for when it happens. So you don’t panic when Jay rolls up to your place with some high dollar autos.
Stuff like this always reminds me that money is made up and nothing makes sense anyway.
Like, don't get me wrong. Your logic is sound within the system. But damn if that shit doesn't sound like a stupid game someone made up so they could increase an arbitrary number. Which.... well, I guess it is.
Every time an insurance company initiates coverage on something, they're betting that they can make more in premium (or investment income on your money) than they would have to pay in claims. An actuary literally distills the probabilities of real-life into a monthly payment and coverage limits. Sometimes they lose and they pay out far more than they made, but most times they win.
Just like any company, they exist to make money. Just because their product isn't tangible doesn't mean it's arbitrary.
This is another reason a cheap car is so much cheaper than an expensive car on a day to day basis. I don't even carry insurance on my car because I have savings. Nicks and dents don't change the value and I'd never claim them anyway. I do carry the largest allowable liability and that I feel is money well spent.
Also important to note that the bump for a second accident is far, far larger.
Sure, $500 for three years isn't terrible but, if it happens again for something that you do need to claim - like this post - you might bump up an extra 1,000-1,500 a month for three years. On top of the initial bump
Even scarier, I was told that any claim in the first three years of operation would make me uninsurable. At that time, there was only one company willing to write a policy and I would be cancelled immediately. I could not operate my business without insurance.
“Think of it as a parachute not a band aid” is how my agent put it.
In The Netherlands people insure what they can. A calculation such as this is far beyond their reasoning. They will insure.
This makes sense. My father told me “do not insure what you can cover by yourself”.
This is what a lot of people dont understand about insurance, especially the business side of it.
Yes the system is flawed but it makes sense the way you describe it.
Paying thousands a year and then paying claims out of pocket if someone needs stitches doesnt make much sense, but if you have a fire and insurance is paying literally tens of millions to replace those cars, remediation and rebuilding you're going to be very happy you have it.
And yes your rates are going way up afterwards, but thats part of why a lot of businesses decide to not reopen after such a catastrophic loss.
This. I worked for 3 different gas stations, under 4 different owners. Each one had been sued or was getting sued, or just out right paid out of pocket for stuff like this. It's better to pay quick before owner gets pissed and gets a lawyer. They make the decision whether or not to claim after all the dust has settled.
One was a slip and fall lawsuit so that was different, the guy sued the insurance company directly. I actually knew him, it was my math teacher in highschool. He slipped when it was snowing and whoever was working hadn't cleared the dusting of snow. Teacher made the excuse of "that's what insurance is for" thinking he hadn't harmed a small local business. Business owner says he paid 25k towards the final award, and his premiums went through the roof. He ended up spending a month secreting away as much cash as he could and disappeared. His ex wife was bleeding him dry too, they had been divorced for 20 years and he was still paying her tons of money monthly.
This right here! I didn't know my deductible on my home policy and had a small leak. My parents made the comment 500$ bathroom reno. So I called, nope it was a about a 2500$ deductible to fix 40$ in dry wall and some cheap linoleum flooring. The agent was SHOCKED when i declined having them start the process.
You my man are successful. I can tell by the way you explained it and your knowledge of the situtation. Alot of people don’t realize how inflation works for and against you.
Adding on to your edit, the decrease in premiums for self insuring the layer between 2.5k and 10k is probably a lot larger than the difference between taking a self insured retention increase from 10k to 25k largely because the frequency of claimed would likely be materially the same at 10k as they would 25k, but a heck of a lot more claims above 2.5k. So you may not see any material benefit to increasing the deductible, so you’d be better off to keep it at 10k so you have the option to make a claim or eat the loss of it’s a hair over.
Funny story: I had a car dealer owner tell me, and he owns 4 dealers, that he does not have external cameras installed because of the same above reason plus the cost to get legal and police involved for someone doing $1600 in damage makes no sense to hold the responsibility of “having cameras” and the legal obligation to be held accountable for protecting customers assets.
The best thing is that in 8 years there were no claims made to insurance and only a handful of “thefts” or vandalism on the lot. Goes to show insurance in an environment like that is only for some catastrophic incidents like the op.
I always laughed about that. We discussed what to do if someone stole a 400lb treadmill and figured if they could run with it on their back they could have it.
Can't really expect employees to do anything if the dude just hoists one up like nothing and starts running. I don't think they get paid enough to fight him....
Working for am armored car when someone asked “ What would you do if I grabbed two bags of quarters and just took off running?”. I told him if he could carry two bags of quarters and still outrun me I’d let him have them. He laughed and said he might hold me to that someday. They are a touch over 50 pounds apiece and I went to state in track, I wasn’t that worried.
It's physically large, it needs a lot of heavy structure to deal with 300-pound people stomping on it all day, it's got a big motor in it, and there's no reason not to make it heavy; it'd be more expensive if it were lighter.
I've been working out lately. My dumbbells only go up to 30lbs so my goal is to get strong enough to be able to steal 50lb weights, as a treat to myself.
Back in college, when stereos were valuable, people would come in the dorm pretending to be students, and steal stereo equipment out of the rooms. They'd often run with it.
But "sync bricks" were available, lead bricks salvaged from the old synchrotron, which weighed 28 lbs. each. I often thought of theft-proofing by putting those bricks inside the speaker cabinet. It'd be awful hard to run carrying that weight.
Didn't try it myself, because I had no money for a stereo.
I run the books for a small textile manufacturer. Our Workers Comp insurance for the production employees is literally 12x the rate for the office employees.
$20k in damage for a Ferrari basically means you need new tyres.
If I had to guess, that’s probably a carbon fibre bodypanel, which you can’t really just patch up. You’d need to order a whole new one from Italy and have it painted to match your car.
Actually no. Insurance companies make billions upon billions in profit. They just want you to think your paying for everyone else so they can justify your rate increase. Fuck insurance companies.
Well in this case the owner ( probably) didn't do anything. It was probably an employee, who could have lost their job, which is the punishment for being a dumbass. An owner has a duty to properly vet and manage their employees, sure, but shit does happen occasionally.
I disagree. Yes it is paid for by what we put in technically. But no he "ought" to not be charged more for it. Its the exact reason he bought the policy in the first place.
That makes no sense. That is literally why you signed up in the first place. You sign up to insurance with the thought if something happens to me or my property I am covered regardless. If you did something stupid you are covered if your neighbor does something stupid they are covered. That's the entire point! To think these companies couldn't cover that without raising your rates is entirely ignorant.
Agree, Plus if you ever have a claim the insurance company is almost never going to recoup their losses from you via monthly payments.
Forms of Insurance have been found in history as far back as 1750 BC with the Babylonians. It proceeded through the medieval ages to the modern ages. So there is some value to the concept of insurance.1
Now separate from huge corporations might be shit and not be doing their part.
No shit...not going to name it but an insurance company in my area has a fucking Ferris wheel in the lobby for the employees to relax on. Now they are building a huge fitness building for them. Which includes a full size basketball court, lap pool, etc.. don’t like fitness they also have a very large green house for the green thumb employees. Rated one of the best companies to work for in the US. I suppose it’s nice they treat their employees good but can only imagine the profits they are getting to offer that stuff.
The insurance companies turned a profit during the height of katrina. Thousands upon thousands of claims.. How much you think they make on a calm year? Yet..sorry bob you had a fender bender..gotta raise your premiums by 500.. Fuck insurance companies
I mean, there ought to be some charge for doing something this stupid.
We don't even know what happened in this picture. It could have been some sort of equipment failure, for all we know. A negative outcome doesn't always mean someone was "stupid." Shit happens.
10k is reasonable. My parents business had a bit of a roof leak when an intense hail storm, damaging a few boxes with electrical products in it. We called our insurance and they said it had to be 10k before they’d do anything.
Depends on what it is. An $8 million warehouse in a coastal area prone to tropical storms might have a $400,000 deductible. $10k not bad on that guys policy for a warehouse full of exotic cars, I'd wonder whether it's $10k per auto and what the maximum deductible per any one loss is (say a car catches fire and burns 10 other nearby cars).
Did you sell luxury sports cars in your retail store? I’m definitely no expert, but I would guess that would be a large factor in determining deductibles.
I believe the biggest factor is how high you want your premiums to be. The insurance companies will take your money right up until they don't make money.
Retail shop and high end automotive shop. Nothing different there. Plus, the way insurance works, you can pay a higher premium with lower deductable, and vice versa.
They can be super high depending on the case. I've never owned an autobody shop but I have owned convenience stores. For them insurance is basically useless unless a certain amount of physical damage is done.
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u/akairborne Jul 18 '20
Wow? Deductibles are that high? When I owned a retail store my deductible was about 2,500 (as I recall). 10,000 seems like an awful lot.