When we first started full-timing, we were very concerned about insurance because we had heard that you really needed to have a special policy as full timers that would cover you in case you had an incident. Knowing this we chose Miller’s Insurance, who specialized in RV coverage, and ultimately got a policy through Allied who is owned by Nationwide Insurance. I was pretty relived that the company was one that I knew and not an off brand insurance carrier. Thankfully since we have been on the road, we have had two claims and they were both paid immediately. The first was a major one, when Lee put regular gas in our diesel tank and our engine was destroyed. That was by far the largest claim we have ever had in our lives and the insurance company paid $9K for a new engine. Then last year we had a windshield chip from Alaska and had our windshield replaced. Since we are Florida residents, windshield replacement have no deductible and that saved us around $1350.
Needless to say I have been extremely pleased with our carrier, but as our premiums keep creeping up, I was starting to get concerned. I am a loyal customer though, and since the price was going up annually in pretty small increments I thought I could live with it. But this month our premiums went up again and this time it was $70 a month, a whopping 43%. OK, that is a lot of money, and although we had offsetting savings in other categories this year, we obviously wanted to know why we were getting a 43% increase. Unfortunately that is a tough question to get an answer to. Part of it was the claims, part of it was the hurricanes in Florida, and part of it was the higher cost of vehicle repairs. Lee was pretty frustrated because he wanted a breakdown of how much of the increase was due to each factor, but if you have dealt with insurance companies you won’t be surprised that that didn’t happen.
So we did what any rational person would do and started getting quotes. Yes, I am loyal, but I am also not willing to get screwed, so we wanted to see what else was out there. That’s when the conversation became interesting. Turns out that we could get a better price on the truck (about $350 a year less), but if we split the RV and truck coverage the RV costs would go up $150 a year. OK, we thought, we will move both of our coverages to the new company, but then we learned that if we did that we could no longer get total loss replacement coverage for the RV. We bought the RV new in 2014 and our coverage has been for replacement value (around $70K). This wouldn’t cover the Mor-Ryde, solar, or any of the other upgrades we have done, but would cover the $48K we have left on our loan and then some. Unfortunately we learned that at this point the only new RV policy we could get would only cover present day actual cash value. Since that valuation is only $40K (and we might not even get that) not only would be out our RV, but also still owe money on our loan.
I guess I shouldn’t be surprised by all of this really, since I sort of understand why they wouldn’t want to insure us for more than the RV is worth, but I am really glad Lee delved into the fine print and found this out. At this point we had a couple of choices. We could leave well enough alone and just pay the extra premiums, at least for this year, or we can split the coverage. Since we are still to the good with how much we have paid in premiums versus how much we have received in claims I was leaning towards just leaving it alone. Lee absolutely did not want to lose the replacement value coverage and had the same concerns with a new policy on the truck. We have replacement value on our truck as well and although we have no loan with that so actual value wouldn’t be a loss, it would probably be difficult to find a replacement truck with the money they paid out.
Which takes me to why I am taking the time to write all this out. We get the question quite a bit of what we would do if we had a catastrophic incident (fire, collision, etc) and although we have thought through that scenario it is not something we dwell on. Obviously we are not completely rolling the dice here, or we would have the cheapest coverage available, and we intentionally structured our insurance plans to give us what we considered reasonable coverage. As a side note we also have $30K in personal item coverage on the RV, which should more than cover what we have in the rig. In any event we have this coverage and now three years later faced with changing our strategy we had decided to continue with it as is, knowing full well that at some point in the future the monthly premium hikes may necessitate a change.
For right now, if we had a catastrophic occurrence we would take the money and try and pay cash for a new truck and RV. I will say this time around I would be completely open to buying something used, and since this particular model isn’t that common, if we got lucky I would try and find something very similar. It is very likely that we wouldn’t have enough money to completely cover the costs and in that case we would have two choices. We could take out another loan, which I am guessing would mean we would have to stop for a while and get “regular jobs” to qualify, or I could take a loan from my 401K and we could pay ourselves back with interest. Which route we took would depend on how much money we were short, but either way it would definitely be something we could survive.
Lots of people have to leave the road for a little while, and just because you take a break it doesn’t mean you can’t jump right back in once you have more money in the bank. I think there is a tendency to believe that this journey has to have a strict beginning and end, but that simply isn’t the case. Especially at our age, since we are only 49 and 51, (just for the record, I’m the younger one. – Lee) we have lots of time ahead of us to make adjustments. I mention this because the all or nothing approach was firmly in my mind in the beginning of all this, but now I know better. Many people we know have had life events that have temporarily sent them from the road. Illness, deaths, grandchildren, finances all can play a part and taking a break is really that not big of a deal in the grand scheme of things. Yes, getting started is a huge life change and for most people requires a steadfast commitment, but once you have done this for awhile and seen how many different ways there are to live the lifestyle, you can ease up on that all or nothing approach.
Do we think a catastrophic event will happen? We don’t, but we are prepared for it in our own way. Your preparations will probably be very different, and that is the way it should be. I am just sharing our thought process, in case you haven’t talked these scenarios through yet, so you can see how we are thinking about it. Plus it gave me something other than gate guarding to write about!
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I’m certainly no insurance pro, but if you did split the truck and rig between two companies and had an accident involving BOTH, wouldn’t you have to pay the deductible on two policies instead of one deductible? That could be painful……
Heaven forbid you should have a catastrophic event. That being said, dipping into a 401k for anything other than as a last resort is ill advised. The notion of paying yourself back is flawed. In point of fact your 401k contributions (not 401k loan repayments) are essentially pre-tax since during tax filing season you can deduct them from your income. If you borrow from it, you will be paying back in after tax dollars… meaning any funds you use for loan repayment have already had income tax deducted since the IRS treats even 401k loans like any other ordinary expense you have and therefore is not a tax deduction. Then once you actually retire and begin withdrawing the restored funds it will be taxed once again since all 401k withdrawals are subject to tax. Loans don’t count under the rules. It is truly double taxation. Avoid borrowing from a 401k or IRA like the plague… unless you have no other options.
My recommendation, FWIW, is to add savings to your budget for just such a contingency. Hopefully you never need it but it will be there if you do and later if your plans change, it’s available for other uses. As you say everybody probably has some methodology that works for them. YMMV.
JMHO, Brian
If you take the money out and pay yourself back with interest it isn’t taxed. In that case you are actually saving money because instead of paying interest to a bank you pay yourself the interest. You only get taxed if you withdraw the money and don’t pay it back.
I was reading about your diesel/gas problem and looked at your post from 2015 and you talked about a $9000 repair to replace the engine. You never mentioned if the final bill came back at $9000 or if that was just an estimate. In this blog, you said it cost $15,000. I read both blogs to my husband and asked him to please be careful when filling our diesel truck with fuel. He was not aware that gas hose would fit in diesel tank. Thanks for the heads up on this and also that our insurance company might pay for repairs. After talking with our insurance agent, about our RV and 5th wheel since we only winter in our RV, he advised us to treat our 5th wheel as if we used it full time, since our old coverage covered our trailer when it was attached to the truck. I explained that our winter rv park has large trees and if one fell on our trailer, would it be covered and he said not unless the truck was attached. The RV park advised the people who have park models that they are only responsible for damage up to their deductible. Most policies are maxed out at $1000.00 deductible, so if one of those trees fell on our rig, we would only get $1000 from the park owners and our insurance would not pay anything. This was a big eye opener for us, because the only time the truck is attached to the trailer is when we are towing. The rest of the time the trailer would not have any insurance. We have Foremost insurance on our rig and off road vehicles. So far, so good on claims. So far, we have only experienced a tire blow out that caused $2000 worth of damage. Thanks again for the info on the diesel pumps. Hubby will definitely watch closely, since you can’t trust stations to identify diesel versus gas. i really enjoy your blogs, but I was curious why you do not show savings monthly in your budget, for situations, such as deductibles, emergency funds, etc.
Hi Brenda, First I think you are right about the dollar amount…I’ll change the most recent blog post. I had $15K stuck in my mind and didn’t go back to the original post. $15K was I think the estimate we got initially without having insurance, but the insurance company paid less. Also thanks for the additional information on coverage. It really is an important issue for fulltimers and something folks need to be careful about. Your example of a falling tree is a good one. As far as the diesel goes, we and most of our friends actually put our finger on the word diesel now before we push the handle. I know that sounds silly, but two years later we are still doing it, because that is definitely not a mistake you would want to male twice and that is an almost surefire way to make sure that never happens. Again thanks for commenting and the additonal information.
I am hoping that once I retire for the 2nd time we can start traveling 3-4 mos per year, keeping our home as a home base…and that it will be just like “riding a bicycle” and come back to us! Great thought provoking blog!!
We ran into an issue this past yr. where we had diesel emissions fluid in the diesel fuel we bought. It caused us to have the complete fuel system replacement around $9400. Ins. payed the bill. We recently domiciled to Fl. and when the ins. (Safeco) moved us from NC to Fl. our premium went up. I wonder if that was there way of getting some more back.
Probably. We talked to another friend of ours who is based in Florida and his rates went up 20% this year and he had no claims. I would imagine they are losing money from all the hurricane claims and need to do something to recoup their losses.
Greg and I also are Florida residents and carry insurance through Good Sam/National General. When we moved from Iowa to Florida. The insurance went from $1200/yr for 2 vehicles,a trailer and the 5th wheel to $2200/yr. We put in a claim for $1500 last year, we paid $1000 of that (we should have just paid it ourselves). NG rose our rates from $2200 to $2800/yr. When we sold the trailer and my vehicle it went down to $2600/yr. The rep I talked to said we’d be better off going to So Dakota. The reason was the state of Florida really sticks it to full-timers. Plus the accident rate is higher in Florida. Greg has checked into things and this April we will change our residence to South Dakota. There are 3 couples in the RV park we are at now that resident there. Their full-time insurance for 2 new vehicles and a 5th wheel and golf cart is $1600/yr. Much better.. Insurance….*ugh
Be very careful picking your state of residency solely on vehicle insurance rates. Health insurance is MUCH more volatile and can cost you tens of thousands if you don’t do your homework by state. Everyone’s situation is different, but make sure you consider ALL the factors…..
Thanks for the info. For us we need the health plans that Florida offers but if that wasn’t an issue I can see making the switch for that kind of savings. Again thanks for passing it along
Seems every 2 years we need to change carriers. In 2017, Natl Interstate popped us with $1000 increase. No infractions against our driving records, same vehicles, and only claims were 2 windshield chips for a total claim outlay for them of $65 (Alaska). They said increase was due to “frequency of claims”.
It didn’t matter what a miniscul amount of money the claims cost them. Our agent said afterwards that we should never put in a claim unless for major issue. We should put out of pocket for small stuff. What a joke.
Wow that’s crazy and thanks for the info!
Insurance companies… ’nuff said. Some form of self-insurance to the extent possible seems to be the answer. Insurance premiums are mostly money down the drain. At least with self-insuring yourself that money is yours if you never spend it for it’s intended purpose. Our agent also advised us not to put in a claim for most stuff for the same reason on our S&B. Putting money into your budget for such “events” (or self-insuring) is prudent financial planning.
We’ve talked about it and I certainly see the benefit of self-insuring, but we tend to be financially conservative by nature and for the time being at least are continuing with our coverage. Since we did have the large claim that was promptly paid when we least expected it, I fell like for us that was and continues to be the right decision, but who knows what the future will being and if the rates get to the point where we can’t afford them then obviously we will need to go in another direction.