Optimize your Swiss car insurance policy

Once I started to read early retirement blogs earlier last year, I couldn't stop to apply Mustachian lifestyle principles into my own life. That got me in the first change I applied and described in an previous blog post: getting richer thanks to my wife power by adapting my car insurance contract.
Then, I got a second chance to optimize even more my car costs thanks to mathematics, and more precisely statistics - you know, the stuff you usually hate while in school... I wish some teachers would have presented me maths through financial examples...

Anyway, I remember that I was reading on my way back home the "insure yourself and stop to pay useless insurance fees" MMM article when I switched safari tab to get onto my car insurance online calculator.
At that point, I was paying CHF 1680 per year - thanks to my darling respectful age. That was for full car insurance (French: "casco collision", German: "Kollisionskasko") meaning I could be crazy and dumb enough to crash my family and myself onto a wall, I would get my fancy car reimbursed! Yeah, what a reassuring feeling!

In Switzerland, you have two main choices [1] when it comes to find an insurance for your car:

  • full insurance (French: "casco collision", German: "Kollisionskasko"): you can crash your car alone without any third party hitting you, you will get reimbursed no matter in what circumstances: e.g. crash due to a patch of ice, or due to your inattentiveness while scratching your door side on a highway guard rail.
  • partial insurance (French: "casco partielle", German: "Teilkasko"): you will get reimbursed only if you get your car crashed due to someone else fault: e.g. you get hit by another car who crossed a corner where he should have given you priority, hence he is the guilty one.

Basically, if you own a CHF 30-40k (or more) in leasing mode, you are better - and anyway forced by leasing companies - to get the full insurance to not be in trouble in case you are the 1 unlucky person out of 24'500 who crashed himself on his own fault (source p. 33).
But between you and me: SELL THIS CAR ON LEASING RIGHT NOW!!! If you can't buy it cash, then simply don't buy it at all!!!
A better and less stupid reason for you to be fully insured would be the case where you own a 5-10k car because you don't have any other choice (really?!?), and that you can't already get self-insured in case of an accident happening. That case would be valid during six months to one year maximum, until the time you get enough cash cushion in your 'stach, right?!

So, after reading MMM's article, I discussed with my wife about her thinking regarding the fact that we had children, which was making us driving even more safely than before (hrhr... OK I was one of these speed addict younger).
We also checked what it would cost us to buy an used and big enough car in case we would crash our car due to our fault: that was around CHF 5k which was some money, but a small enough amount to be paid within few months of salary.

In the end, we decided to take the leap and switched from full insurance to partial insurance.
We got from CHF 1680 to CHF 743 - a CHF 940 difference per year.
Bring that back on a 10 years scale and the savings go up to around CHF 10k [2], just by driving carefully and not buying fear advertisements published by car insurance company (yes these guys also have marketing department!).

So if you don't know what to do now: look for an used car costing less than CHF 10k on websites like comparis.ch, autoscout24.ch or autosquare.ch.
Then insure it a with a reasonable partial car insurance, and drive safely - while also riding your bike instead of the car more often, so that you decrease even more your accident's chances. And please, never ever buy again a car on leasing. That should be forbidden in our so called "civilized countries"!!!


Notes

[1] Actually there are three choices. I will detail the third one (liability insurance only) in another blog post because I need to dig into its mathematical implications before presenting it to you.
[2] These are the most pessimistic calculations, implying you would be crazy enough to keep this money under your matress instead of investing it into some index funds.



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