For one Minnesota driver, paying off her car was supposed to be a financial milestone. Instead, it became the setup for an expensive lesson in insurance, risk, and bad timing.
"I had just paid off my car and dropped to limited liability to put that money in a savings account for my daughter," she wrote on r/PovertyFinance. "Don't drive very far to work, just 15 mins. But I do park on the street, a really really wide street, wake up in the morning and see my car has been totaled."
She explained later, "It's a 2015 Kia Optima, I just took it around the block and it drove fine, you can't tell it's damaged inside at all, I'm having the glass replaced on Monday. I pushed down the trunk with bungees and the lights and the back-up camera still work."
Don't Miss:
- A Battery That Lasts 100 Years? Paladin's Solid-State Graphene System Is Changing How Homes and Businesses Store Power
- This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100.
Police confirmed it was a hit-and-run: another driver plowed into the car behind hers, which was pushed into her Optima. The middle car shared insurance information, but it didn't matter. "My insurance said they can't do anything and it's all the guy's insurance who ran, and that I have to find him myself," she posted. "The middle car is not at fault and not their problem either."
That's when the reality of liability-only coverage hit. "Literally I've always had junkers my whole life," she admitted. "This was the first car I've ever had, it's like it's just not meant to be."
Redditors didn't hold back. One summed it up in blunt terms: "You've learned an expensive lesson. Collision insurance isn't just for you hitting things!" Another added, "Never just do liability unless you're in a position to replace the car yourself in worst case scenario."
Trending: Backed by $300M+ in Assets and Microsoft's Climate Fund, Farmland LP Opens Vital Farmland III to Accredited Investors
Some questioned her insurer's response. "What kind of cut rate insurance is this?" one user asked. "You pay insurance so they do the legwork." Others quickly clarified: "Not if it's a liability policy only. Liability only pays for other cars, not your own."
Advice poured in, ranging from practical to philosophical. "If no luck finding [the driver], determine if your car is actually drivable and what's essential to be fixed to work," one user suggested. Another urged, "Do not drop your coverage next time. I paid my car off three years ago and still have full coverage."
There was also empathy. "Awww man. These the WORST," one person wrote. "This is why we can't have nice things y'all."
But the thread's larger theme was clear: carrying only liability is a form of self-insurance. It works if you can afford to replace your car outright. It doesn't if losing the car leaves you stranded. As one commenter put it, "Tough lesson to learn but you shouldn't go liability only unless you're able to replace the car out of your own pocket."
In this case, the gamble backfired. What was supposed to be a chance to save $50 a month in premiums turned into a sudden scramble to either repair or replace her car. Or, as another commenter said more bluntly, "Unfortunately the answer is get a new car or fix this one. Either way, expensive lesson."
See Also: The ECG Hasn't Changed in 100 Years — This AI Upgrade Could Help Detect Heart Disease Years Earlier
In Minnesota, cutting from full coverage to liability-only might save a few hundred dollars per year. According to Bankrate, minimum coverage in Minnesota averages about $709 annually, while full coverage averages $2,552. Other sources put full coverage at around $1,786 per year or about $149 per month.
So, she might have saved somewhere between $1,000 and $1,800 annually by dropping coverage. But that "savings" pales compared to what she lost — a totaled car, no payout, and the cost of repair or replacement entirely on her.
The late Charlie Munger, Buffett's longtime partner, was no stranger to the idea of self-insuring. In a 2023 Daily Journal shareholder meeting shortly before his death, he said that after amassing wealth, he stopped carrying fire insurance on homes. "I just self-insure," he said. He viewed insurance, for those who can afford it, as a transfer of risk — but one that only makes sense if you can comfortably absorb a major hit.
A billionaire can decide to self-insure because losing a house or car is financially tolerable. That's a luxury few can claim.
Here, the 40-year-old Minnesota teacher gambled on that same logic — cutting costs by removing coverage — but clearly couldn't absorb the cost when disaster struck. The difference: she didn't have the financial safety net to back it up.
Read Next: Have $100k+ to invest? Charlie Munger says that's the toughest milestone — don't stall now. Get matched with a fiduciary advisor and keep building
Image: Shutterstock
