A one-time school project gone terribly, terribly wrong.

31 May 2006

Guilt-Free & Necessary Debt

More good news:
So Ford won't cover the fuel pump under the warranty, given that it's not a defect. Understandable. But upsettingly, my provincial insurance will.

Why upsettingly? Well it works like this: At the moment I have my 43% discount. It's a bonus for being "claim-free". If one retains that 43% for seven years, one essentially earns a free accident--that is, if you have an accident it won't affect your insurance rate. Because the provincial insurance company, a monopoly, has to insure the entire population, that still means I pay roughly $1400 per year to cover the drivers whom no-one would insure elsewhere.

Unfortunately I'm short of that seven-year mark. So if I claim my $600 fuel pump repair I lose a big chunk of that discount. I pay extra for three years until I regain the whole thing. How much do I pay? Well over the next three years I pay out $900.

But wait there's more! Of course my insurance has a deductible--the amount I'm required to pay before the coverage pays for the rest. It's $300. So for my insurance company to cover half of a $600 repair, I must needs pay out $300 plus $300 a year for three years for a total of $1200. My insurance agent told me: "Basically it's not worth claiming for anything under $1500".

Logical conclusion: the next time this happens, I should drive the car back over the rock to puncture the oil pan, then rev the engine until it seizes!

I can actually afford not to run the car, if I so chose, because unlike the vast majority of my countymen I actually live close enough to walk to work. And I have resources that will permit me to borrow the money fairly cheaply. But what if I didn't have access to the funds and had to commute by car? I would, in essence, be forced to pay $1200 through my insurance company for a $600 repair!

Would rates be cheaper if the practice of insurance didn't actively encourage fraud?

The really daft thing is that I could do the job myself for parts cost if I weren't trying to preserve the warranty coverage that doesn't cover this repair.


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