To drop or not to drop collision coverage

[daves87rs]

I don't carry on mine...maybe not the Cobalt, but the Cavaliers are worth so little that it is not even worth it.

I'm not worried because we're already saving for another car, so if we lose one, we'll just replace it. We also do not drive as far/as much anymore, so it also takes some of the risk out of it too.

 

[bradepb]

I have it still on the 2004's 500 deductible and when your over 50 with a good record its fairly cheap. I will keep collision til they are worth less than about 4000. Got the college kids insured on the taurus with just real good liability coverage, that way they have insurance but I dont pay outragious amounts.

 

[kb01]

I tend to keep full coverage up until a vehicle is worth ~ $5,000. Auto insurance is so cheap compared to the likelihood of an accident in a given year. I'd much rather pay a few hundred dollars each year to avoid a several thousand dollar loss that comes about once a decade for me. I've only ever had two claims but they were pretty big -- $2,500 for damages incurred by a thief (between smashing out a window, yanking a CD player with a crowbar & destroying the dash, and stealing an airbag) and a tree falling on my car causing around $7,000 worth of damage. A drunk hit-and-run on a parked car, a falling tree, or a junkie in search of valuables can cause a lot of damage.

We live in a lawsuit happy state and a state with abnormally high insurance rates, as a result we pay:

$1,000/year for full coverage on two cars.
$700/year for our homeowner's policy.
$12,000/year for family health insurance.
$300/year for life insurance.

 

[JHZR2]

What people arent thinking about is how much the cost is per year, plus deductible, versus the loss.

If full coverage costs $300/yr, and you have a $500 deductible, then after year 1 the repair needs to be over $800 for it to e worth it. After year 2, $1100. After year 3, $1400.

But if you were to invoke the collision/comp, your rates would likely go up due to risk. So then a $300 coverage is not $400 or $500.

Insurance should be for covering large events, not an $800 scrape on your car that you still need to shell out $500 deductible. This is why we carry $2000 deductible on collision and comp. If we get a $5k repair bill, it pays to invoke it. If we get a $1k bumper repaint, we are better off just paying from pocket anyway.

Now the legal protection may be worth something, given the way that lawyers work and the system turns everything into a bleeding match... But again, you pay for that in higher premiums after the coverage is invoked.

Use sparingly.

 

[bigmike]

Your thoughts don't apply to State Farm, which don't up your insurance if your claim is $750 or less. I've had bumpers repainted from stones/rocks and only shelled out $100. To up my deductible, I might save $30-50 for 2 vehicles for the year. That doesn't make much sense to me.

Also, is auto glass a consideration?

 

[Bamaro]

Originally Posted By: demarpaint
Can you afford to replace it without financial heartache, if you can't effectively write it off if you get hit a certain way? If so then drop it, if no then keep the coverage, and raise the deductible if you like.

Exactly

 

[2002 Maxima SE]

I dropped collision on our 93 Sable...it was great for two years until we hit a deer. The damage was minimal (hood and lights)...too much to pay a shop to fix ($2000 damage) and no way to total out the car without collision. We wound up fixing it ourselves for about $500 in parts...but we would have preferred totalling the car.

 

[tonycarguy]

The cost of the car isn't relevant. What matters is the annual premium as a percentage of the car's current value. Compare that to your likelihood of being in an accident.

The other reason for keeping collision is if you're in a state with limited uninsured/underinsured property damage coverage, like Calif. It's limited to $3500 here. If you want higher coverage, you have to purchase collision. Really stupid!

 

[Noey]

What's the Kelly Blue Book on the car, what is it worth?

Collision is all about coverage (obviously)..but remember that the ins. co will only pay to the amount the car is worth. So, if your car is worth, say, $1500, and you get into a minor fender bender (and let's face it, $1500 is really minor these days), then the Insurance company's liability..the amount they are required to pay you.. is only to the book value of the car, regardless of how much actual damage is to your car.

So, if the car isn't worth much, you should drop it. And drive veeeery carefully.

 

[ledslinger]

Most factors have been covered, except how much risk to your car is there where you live. I continue to cover my daughter's 1999 Accord with collision since she lives in Chicago. If she were home in semi rural Missouri, it would have liability only. She is moving to New Jersey, so I guess I'll continue to buy full coverage.

 

[Norm Olt]

Just dropped the collision on the '91 & '88 420SEL's last renewal time.

With a 2nd '88 running parts car I can't think of a situation where I would run out of body parts (or hard parts) sufficient to repair an accident that was my fault.

We do keep comprehensive on all cars that are driven on the road because that covers theft, fire, vandalism, broken windshields, etc. for a very $mall premium.

Cheers!

 

[rjundi]

I think a good rule of thumb is when you spend more than 10% of vehicle's value on the collision insurance, drop it.

Vehicle value is what it is worth in books irregardless what you can sell it for or dream about.

 

[tonycarguy]

Originally Posted By: ledslinger
Most factors have been covered, except how much risk to your car is there where you live. I continue to cover my daughter's 1999 Accord with collision since she lives in Chicago. If she were home in semi rural Missouri, it would have liability only. She is moving to New Jersey, so I guess I'll continue to buy full coverage.


The premium you pay will account for the risk based on where you live and drive. You don't gain anything by covering a car that's in a riskier place; you don't gain anything by dropping collision in a low-risk area. Relative to the risk, you are paying the same whether you're in Chicago or Missouri.

 

[tonycarguy]

Originally Posted By: rjundi
I think a good rule of thumb is when you spend more than 10% of vehicle's value on the collision insurance, drop it.

Vehicle value is what it is worth in books irregardless what you can sell it for or dream about.


10% is really excessive. Unless someone is an awful driver, they should drop it if it's above 3%. On one of my cars I pay less than 1%; on the other I pay 1.6%. That's just for the collision portion. My personal rule is 2%; above this, I decline coverage.

 

[rationull]

The car's KBB value is around 10k. The collision portion of the bill is around $400 per year now I think (it's been higher in the past, but that's a sunk cost now). I think I'm going to keep it for another year, at least.

 

[Norm Olt]

Originally Posted By: rjundi
I think a good rule of thumb is when you spend more than 10% of vehicle's value on the collision insurance, drop it.

Vehicle value is what it is worth in books irregardless what you can sell it for or dream about.


1st sentence is a good yardstick.

2nd sentence is just plain wrong. There can be a huge difference between the actual value of three vehicles, one of which is in "average condition", one of which is in bad condition (less than average), and one of which is in "better than average condition". Insurance companies must pay the actual replacement value of the vehicle. The claimant is to be placed in the position they were prior to the accident.

It is the obligation of the contesting party to establish the legal basis for declaring a vehicle in "bad" condition or "better than average"...

There are some vehicles that are worth more than their original selling price. This can be due to just plain rarity, or an established collector value, etc.

Think 1980 Corvette: a clapped-out 180K mile repaint with a 350 truck engine and rusted wire wheels is not going to be worth what an 80K all original example with detailed maintenance records goes for. One with a rare combination of factory options and under 10K miles might be worth 5X as much.

Cheers!

 

[rjundi]

Originally Posted By: Norm Olt
Originally Posted By: rjundi
I think a good rule of thumb is when you spend more than 10% of vehicle's value on the collision insurance, drop it.

Vehicle value is what it is worth in books irregardless what you can sell it for or dream about.


1st sentence is a good yardstick.

2nd sentence is just plain wrong. There can be a huge difference between the actual value of three vehicles, one of which is in "average condition", one of which is in bad condition (less than average), and one of which is in "better than average condition". Insurance companies must pay the actual replacement value of the vehicle. The claimant is to be placed in the position they were prior to the accident.

It is the obligation of the contesting party to establish the legal basis for declaring a vehicle in "bad" condition or "better than average"...

There are some vehicles that are worth more than their original selling price. This can be due to just plain rarity, or an established collector value, etc.

Think 1980 Corvette: a clapped-out 180K mile repaint with a 350 truck engine and rusted wire wheels is not going to be worth what an 80K all original example with detailed maintenance records goes for. One with a rare combination of factory options and under 10K miles might be worth 5X as much.

Cheers!


What is interesting is my sisters broken down Cavalier wagon with two flat tires and not running got hit by a run away trailer. The other insurance company simply gave the average selling price of vehicle. Condition was irrelevant. My sister in college felt like she won the lottery as she never paid for the car to begin with.

 

[Norm Olt]

Most people don't complain to much when they get more than they didn't pay for...

 

[Oregoonian]

I think the general rule is....if your collison insurance cost is more than 10% (per year) of the current value of your vehicle....it makes sense to drop the collision.

So....you need to check with your insurer...what the current value of your vehicle is...each time your renewal notice arrives.
______________________________
03' Ford Focus (2.3L Duratec) / 95K