INSURANCE QUESTION

[Oregoonian]

I have an 11 year-old vehicle, and have both collision ($500 deductable) and comprehensive ($250 deductible) on my insurance policy with State Farm.

My question is; What is a general rule as to when to drop those coverages. I'm thinking that now might be the right time to do it. It would save me approximately $200 over a six month period. I'm retired and live on a limited income.

Would value your thoughts.

 

[Rand]

how much would they pay out if it was totalled?
(or replacement)

 

[ted s]

exactly

 

[Mackelroy]

Liability usually costs the most, and glass can be broken at anytime or theft, you have a very high deductable on glass and theft.

$200 savings over 6 mos, and somebody uninsured hits you tomorrow , the collision might be nice, you have to weigh whether the $200 is worth it.

 

[Oregoonian]

Originally Posted By: Rand
how much would they pay out if it was totalled?
(or replacement)

My guess would be in the neighborhood of $4000 +/-

 

[Oregoonian]

Originally Posted By: Mackelroy
Liability usually costs the most, and glass can be broken at anytime or theft, you have a very high deductable on glass and theft.


I would still carry liability (25/50 for bodily injury and 25 for property damage). Its required in my state. In addition, I will also continue to carry uninsured motorist.

I don't think the vehicle has much of a chance to be stolen, considering its age.

 

[earlyre]

Originally Posted By: Oregoonian
Originally Posted By: Rand
how much would they pay out if it was totalled?
(or replacement)

My guess would be in the neighborhood of $4000 +/-

NADA Values, with standard equipment for Zip 97701 (hopefully that's fairly close by...)

also not sure how these values relate to insurance payouts but this is at least a datapoint in those calculations

 

[Mackelroy]

I meant most of the premium is liability. Collision and comp is generally a much smaller piece of the premium.

You could probably keep the same coverage and save $200 bouncing between geico or progressive.

I was once a state farm customer for 20 years. They have a lot of overhead, they've been downgrading a lot trying to get more competitive margin wise.

The last house I bought statefarm was literally double geico on premium.

 

[Kuato]

$200 every 6 months spread out over 4 years would pay for the car. You have to weigh the insurance cost against the "what if" of losing the car to a tree or other act of nature, or being at fault in an accident. If the chance of either of these is very low then losing the coverages is a good option.

 

[mattwithcats]

How many miles do you drive?

State Farm (and many others) have price tiers based on mileage.
Around here in Virginia it's-
Over 7500 miles a year,
Over 3500, under 7500
And under 3500

I have liability only on both my cars, they are twelve and sixteen years old (only 75,000 miles on the 98, 17,000 on the 02)

 

[fsdork]

Ultimately, it's a matter of whether a total loss of the vehicle without insurance would be something from which you could recover financially. Over time, insurance companies collect more in premiums and deductibles than they pay out in claims, which is where their profit comes from. Insurance is a cost, not an investment.

 

[Pop_Rivit]

It depends upon how much risk you are willing to take.

None of my current vehicles carry collision insurance. If one of us is in an accident that is our fault, we bear the costs of replacing/repairing our vehicle and are prepared to do so. My person guideline is a vehicle value of somewhere around $14,000. A value more than that and it is worthwhile to carry collision. Below that and it is cost effective for us to self-insure. Needless to say we carry full liability and medical (maxed out), as well as uninsured/underinsured motorist coverage. We're assuming that an accident will not be our fault, and if it is our fault we will bear the costs of repairing/replacing our vehicles.

I keep more than enough in our "vehicle savings account" to pay for a replacement vehicle should any of our current vehicles be damaged or totaled in an accident. That account is made up of not only the monthly payments we make to ourselves, but the savings from not having collision insurance. About once a year I take the excess and put it into a higher yielding investment and let the principle of the savings account continue to grow as we add to it by making vehicle payments to ourselves. The longer I keep vehicles and maintain an accident free status, the more the account grows.

In 2-3 years we will probably replace my wife's Subaru, and assuming we purchase her a new/almost new car it will have collision until the value reaches a point that (for us) is worth the risk to self insure the collision portion of our vehicle insurance. I can't peer into the future, so I do not know what that figure will be. I'll run the numbers at that time and factor in what makes the most sense for our situation at that time.

Keep in mind that we haven't had a ticket nor an accident in around 40 years. For our 4 vehicles we pay less than $1,000/year in insurance premiums.

It pays to be a cautious driver.

 

[eljefino]

Actually a vehicle like a ten year old focus is actually pretty high in theft.

- Its parts fit a bunch of model years.
- It's easy to buy a clean title, not running model for $300 to put those parts on.
- If they've hacked the anti-theft, they know how by now.

I'd still self-insure, though. It cuts the fight you go through for your own money back and gives you the choice of total/fix.

 

[raaizin]

If you could replace your vehicle without it being a burden financially if it were totaled, I would just keep liability on it. If you needed the insurance money to buy a new car I would keep full coverage. Its all about who is taking risk, you or the insurance company

 

[rjundi]

Depends on your own picture. Is $3500 readily available to you to replace vehicle. That is max payout on this one if something happens and it is your fault.

There is a major convenience factor though if you get in a collision with insurance. Instead of dealing with other party insurance you can use your own to cover damages/negotiate/collect payment etc. It has no effect on your own rates if other party is at fault. You are out deductible until the other insurance finalizes payment.

 

[IndyIan]

If you have the money saved up to replace the car, I would drop collision and comprehensive. The side windows are all cheap from the wreckers anyways incase a druggie smashes one for some change.
Do you drive well still? If you are honest? If not, then perhaps keep the insurance. A minor fender bender could be $2k and it would stink to put that into an old car.

 

[dishdude]

On older cars I've dropped collision and kept comprehensive. Comprehensive is usually very low cost ($30/6mos, iirc) and covers things more likely to happen - exterior glass, theft, vandalism, hitting a deer (yes, collision with a deer is considered comprehensive).

 

[zuluplus30]

The general rule of thumb is when the annual premium exceeds 10% of the payout value. State Farm specifically uses NADA clean retail for value assessment. So minus your 500 ded your looking at a payout of ~$3750 if your Focus is totaled. If your annual premiums exceed $375 it may be time to drop comp & collision. That said, if your finances can't take the chance on losing $3750 in a total collision or hail storm or other extenuating circumstances, it may be worth reconsidering. I carry full coverage on my 17 year old Civic only because the difference is $17 a month between liability and full coverage and I can't risk the loss.

 

[Oregoonian]

Originally Posted By: dishdude
On older cars I've dropped collision and kept comprehensive. Comprehensive is usually very low cost ($30/6mos, iirc) and covers things more likely to happen - exterior glass, theft, vandalism, hitting a deer (yes, collision with a deer is considered comprehensive).


What deductible are you carrying on the comprehensive?