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PaperclipPerfector  3mo ago (text post)   2153 thread views

Small-Scale Question Sunday for August 24, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

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He's being forced to insure the value of his own car even though (presumably) he is prepared to replace it out of pocket in the event of an accident. If the car is paid off this is an entirely plausible problem.

He's being forced to insure the value of his own car

No! That is not the case. Per my original post, I'm only being forced to buy Collision coverage if I buy UMPD coverage in Alabama:

I've contacted 5+ insurers trying to purchase an auto insurance package that includes UMPD without Collision, and they all alleged that Alabama bans the sale of UMPD-without-Collision.

Every insurance company is happy to sell me a plan that only includes Liability and (at my option) UM/UIM and Medical; and several reps commented they'd be happy to sell me UMPD-without-Collision if I were to move out of Alabama.

(presumably) he is prepared to replace it out of pocket in the event of an accident

That's exactly it. I'm happy to eat rice and beans for 6 months to rebuild the emergency fund if I break my car due to my own stupidity (which is the risk that Collision coverage defrays), but I'll be damned to do it again because local deadbeat Micahal Rayshone Taylor was driving effectively uninsured because his worthless mother lied to the insurance company about who regularly drives the car (which is the risk that UMPD coverage defrays).

In the latter case, I'm not a squillionare yet so reducing the variance is still worth the middleman's fee; but every insurer claims that Alabama law forces them to bundle these coverages together. But I couldn't find such a law (and obviously the insurance reps don't know shit), so I'm trying to figure out what exactly I need to ask my Alabama State Legislature rep to do.

I guess what I'm confused by is why people have emergency funds. Why not just spend your regular savings or use a line of credit and slowly pay it off, spreading the cost out over a longer period of time? Or if you need a new car, why not finance it?

why people have emergency funds[?] Why not just spend your regular savings[?]

I don't understand your confusion. What's the difference between those categories, in your mind?

Why not just…use a line of credit and slowly pay it off, spreading the cost out over a longer period of time? Or if you need a new car, why not finance it?

  1. Any car with a market value high enough that a bank would consider financing it is going to be depreciating at a rate I'm not comfortable being liable for.

  2. There will be interest, at rates likely higher than Ultrashort Treasury yields.

  3. If I want said interest payments to be less than ~11%, the financer will force me to purchase Collision coverage (and I remind you, avoiding purchasing this was the entire point of opening this thread in the first place.)

I don't understand your confusion. What's the difference between those categories, in your mind?

The difference is that the emergency fund is something you feel the need to separate from your regular savings and refill by spending much less money while you do so. If you were spending your regular savings, you wouldn't let having to buy a new car change what you else you spend. The cost would be spread over decades or even generations.

Any car with a market value high enough that a bank would consider financing it is going to be depreciating at a rate I'm not comfortable being liable for.

I don't know what you mean by being liable for depreciation.

There will be interest, at rates likely higher than Ultrashort Treasury yields.

But less than the expected rate of return of the S&P 500.

If I want said interest payments to be less than ~11%, the financer will force me to purchase Collision coverage (and I remind you, avoiding purchasing this was the entire point of opening this thread in the first place.)

This is higher than I would expect. I just got a call from a car dealer offering me about 4%. Maybe that's with insurance. This makes little sense. I can borrow at about 8% I believe from my unsecured line of credit. Why would the interest rate on a car, which is secured loan, be higher than that?

If interest rates are really that high, then maybe it's a bad idea to lease, but still, I don't see the logic in eating rice and beans for six months to recover the expense. You can spread it over your lifetime by just having less savings.

I know Texas state reps are happy to(have their staffers) research obscure state regulatory issues for constituents who call complaining about it, at least if you are a precinct chair in the same party.

I would suggest reaching out to local republican Apparatchiks to ask state legislators if they can find the regulation.

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