when to drop collision/comprehensive from car insurance?

[snoopy5386]

Our car insurance is up for renewal and I'm reviewing our policy. We have a 1999 Honda Accord with both collision and comprehensive insurance which costs us $210 per year and we have a $500 a year deductible. The Kelley Blue Book value for the car is $2750 for a trade-in, $4025 for a private party sale and $5975 from a dealer. I know the rule of thumb is if your coverage is more than 10% of the value of the car and we are not quite there yet, but still I am wondering what I should do.....WWYD?

 

[NYCDiane]

The last thing you should be cutting back on is your insurance. If you drop it and then have a major accident, what are you going to do?

A friend at work was trying to save money, cut back. Well, her bright idea was to drop all the coverage on her car except liability. Two days later she totalled her car. Now, she's being driven to/from work by her husband, friends, etc.... She doesn't have the money to buy another car so she's totally screwed until she can save the money for one.

 

[snoopy5386]

we have the money to buy another car, that is not an issue. If we totaled the car right now, we'd only get around $3000-$4000 for the car anyways, not enough to buy a new one.

 

[NYCDiane]

we have the money to buy another car, that is not an issue. If we totaled the car right now, we'd only get around $3000-$4000 for the car anyways, not enough to buy a new one.

3K-4K beats a blank.... and with 3 or 4K, you can buy a good used car or, if you need a brand new car, that would make a nice down payment.

 

[IDoDis]

What's the difference in price between the full coverage and only liability? You might find that the difference is not as great as you think because the biggest chunk of your insurance goes towards the liability.

I have one car that's a 1996 Geo Prizm. NADA book value is around $1800. I dropped the full coverage a couple of years ago and then got side-swiped in a parking lot month later. It was the other driver's fault but he never reported it to his insurance. They tried several times to get a statement from him but got nothing, so they dropped his coverage and I was left high and dry. I did find a guy who fixed the body damage for $300, so having to pay the deductible would have been worthless for me.

Your car is worth more though, so you may want to keep the collision coverage for at least another year but lower your collision deductible to $250. It will only cost you about $30 every 6 months for the lower deductible.

 

[Inigo]

Since the premium is only $210 a year, I'd probably keep the comp for at least one more year or so, until the dealer value of the car is down to under $3500 to $4000.

 

[tiggspring]

You may get even less. We had somome hit us.a few years back and their insurance co was awful. Gave us less than blue book value or would fix it with all used parts (yes it was legal . Since the frame was seriously bent we had no choice we were not drving that car. If you can afford to replace it drop the coverage. Chances are you won't get in an accident. If it would be a struggle or you can't get a loan keep it. 2000 is a lot better than nothing when you are living paycheck to paycheck.

 

[tomthebarncat]

If you live somewhere where the weather is bad and snowy. I did this last fall on my 1998 Mercedes Benz E240. I have never had an accident in 25 years of driving. Paid cash for the car, in 1998, and have had full coverage on it ever since. Why, because it is an expensive car. Well, low and behold, I spun out in the snow a week ago and bounced off a guard rail. My car appeared to have mostly body damage. Off it goes to the dealer, they put it up on the rack and take the front right tire off and find a hair line crack in the frame. Car cannot be driven in Germany with a bent/cracked frame, it is illegal. Car is totaled and I sold it to a consolidator for 1,000 Euros. If I still had full coverage on it, I would get getting a check for 4,500 euros. So at this point, I am out a great car, that was dealer maintained through out its life, and I now need to buy another car. I did buy another Mercedes from the dealer but it is a A class and not at all what I am used too! Not to mention this car has wiped out our immediate cash savings. I did not finance it because it is only 6,000 US dollars, with the current crappy exchange rate, plus the grand from the junk guy. So, in the big picture, no one got hurt, guard rail is fine, and I now still drive a Mercedes Benz! And my old car is off to Africa, where a bent frame means nothing. ADAC is paying for a rental car until I can get new car registered, etc. Think about the emotional and financial aspects of this decision. FYI: I went to say goodbye to my car and had a nuclear meltdown in the middle of a major snowstorm, that is how upsetting this whole thing has been

 

[tinatark]

I would keep full coverage on your car - almost $6k value insured for $200 a year is definitely worth it.

Some insurance companies use NADA retail, some use an appraisal service to value your car - the appraisal service stinks! Tax/title fees are also added to a total loss claim payout.

We were involved in an accident with someone (at fault) insured with USAA - they offered us over $2k less than retail - and the "comps" they used weren't comparable at all. I ended up having my insurance company pay for the damages (total loss), and they subrogated to USAA.

If we hadn't had full coverage/rental car, we wouldn't have been able to do that, and the $$ offered by the at fault's insurer wouldn't have come close to replacing the car.

 

[a1tinkfans]

I would keep full coverage on your car - almost $6k value insured for $200 a year is definitely worth it.

Some insurance companies use NADA retail, some use an appraisal service to value your car - the appraisal service stinks! Tax/title fees are also added to a total loss claim payout.

We were involved in an accident with someone (at fault) insured with USAA - they offered us over $2k less than retail - and the "comps" they used weren't comparable at all. I ended up having my insurance company pay for the damages (total loss), and they subrogated to USAA.

If we hadn't had full coverage/rental car, we wouldn't have been able to do that, and the $$ offered by the at fault's insurer wouldn't have come close to replacing the car.

Hondas usually KEEP their values, Higher Deductibles LOWER your rates not increase them as someone above mentioned.
Have you considered trying Geico (and no I do not work for them) but I moved from Nationwide to Geico and Literally saved thousands...NO accidents or violations against us, just basically with Nationwide for eons and they did nothing to help us lower it (except offer their NEW policy, it is a great rate but jumps to 40% increase with ANY accident or infraction) Needless to say, we jumped ship, Geico is professional, easy to deal with, I pay ONCE a year, and do not even think about it...we got an awesome rate and even took classes to reduce it further, so easy...
Well, good luck...seriously consider that when you depend on someone elses carrier (going third party for a claim) their GOAL is to Keep their money, not pay what you'd have gotten thru your own carrier! SO, think long and hard personally, I would not drop the coverage......Go first party, let THEM do the subrogation to get your deductible back!!! Good Luck!

 

[SweetPeasMom2]

If we totaled the car right now, we'd only get around $3000-$4000 for the car anyways, not enough to buy a new one.

If you drop collision and have an accident that is your fault, you won't get anything for it. That is what collision is for. Liability is for the other party. So I'd be careful on that.

My fil had a 1998 Grand Marquis. Only had liability. His car went up in flames. So he was out of luck there. Had he had comp on it, he'd been able to replace it with only being out his deductable. Our rule of thumb, if you can't afford to replace it, you need to have the coverage on it.

 

[Mrs. Bradbury]

We had an old Suburban that was a great dependable car, just old, and we only had liability on it. It was stolen, and we got zip. It's like starting over at square one. I will never make that mistake again.

So to answer your question, my advice is to drop to only liability when it wouldn't matter what happened to the car, as in - if it went *poof*, it would not affect you in a negative way.

 

[bettymae1121]

I have a '98 Saturn. I think I asked my agent about droping collision a few years back, and it made so little difference in the rate (maybe $5 a month?) that I just decided to keep it. $5 just isn't worth it, and besides, Murphy's Law says that if I drop it then the car will be totalled a week later!

 

[Katie]

Much of the above posters advise makes sense..however, depending on the circumstances...liability only may be the best way to go.

My seventeen yr old daughter has "totalled" two cars since July 08. The first one was a 99 GrandPrix GT....with liability only(dumb dumb). The second was as 2002 Grandprix GT with full coverage. The last accident was last week...we just recieved our total loss check for 7300.00( that was after our 1000 deducatiible was taken away. That is a huge amount to replace her car.

However, her rates have SKYROCKETED..and collision is a huge share of the premimium. She started at 800.00 every 6 months...then after her 1st accident it went to 1600.00 every 6 months( she hit another car, and totalled the other car too..so the loss to our insurance company was 43,000)...and now after this last accident, our agent is expecting a 2300.00 every 6 months.

She is 17..she can't afford 400.00 every month for insurance...that's nuts!

We are looking at a similiar car ...1999-2002....but we are only going liability only...it is decreasing her premium by 38%.

Surely, car number 3...will be the charm!

 

[goofy4prez]

Our car insurance is up for renewal and I'm reviewing our policy. We have a 1999 Honda Accord with both collision and comprehensive insurance which costs us $210 per year and we have a $500 a year deductible. The Kelley Blue Book value for the car is $2750 for a trade-in, $4025 for a private party sale and $5975 from a dealer. I know the rule of thumb is if your coverage is more than 10% of the value of the car and we are not quite there yet, but still I am wondering what I should do.....WWYD?

First off let me say that I currently own an insurance agency for the last 6 years and was an adjuster for 9 years as well.

Insurance companies don't use the Kelley Blue Book. Most will use the NADA value to settle a claim. They will take the retail value of the car and then add/minus based on milege, condition, and extras. However, some companies will also use market survey companies such as Total Logic and CCC to settle a claim on a totaled car.

With all of that said; you have a very low premium for having full coverage on your Honda, I would recommend keeping the full coverage on that car a little while longer.

I have one car that's a 1996 Geo Prizm. NADA book value is around $1800. I dropped the full coverage a couple of years ago and then got side-swiped in a parking lot month later. It was the other driver's fault but he never reported it to his insurance. They tried several times to get a statement from him but got nothing, so they dropped his coverage and I was left high and dry. I did find a guy who fixed the body damage for $300, so having to pay the deductible would have been worthless for me.

Your car is worth more though, so you may want to keep the collision coverage for at least another year but lower your collision deductible to $250. It will only cost you about $30 every 6 months for the lower deductible.

Your's is an excellent example of the advantage of full coverage. If the other person does not have insurance or have a problem getting the other company to pay without full coverage you are left holding the ball.

A side note here. Uninsured/underinsured motorist on your policy does not apply to the property damage to your car, it applies to your ability to collect for liabilty for injury. However, some states do offer uninsured property damage for a car carrying liability only.

Also, as for the deductible; that is a tough one to call. When an insured does make a claim for collision and they are at fault they do run the risk of their rates going up. Many prefer not to make a claim for only a few hundred dollars. Lowering your comprehensive may be an excellent idea though. Claims falling under comp with most companies will have no bearing on future rates.

We were involved in an accident with someone (at fault) insured with USAA - they offered us over $2k less than retail - and the "comps" they used weren't comparable at all. I ended up having my insurance company pay for the damages (total loss), and they subrogated to USAA.

If we hadn't had full coverage/rental car, we wouldn't have been able to do that, and the $$ offered by the at fault's insurer wouldn't have come close to replacing the car.

Again, an excellent example of full coverage working to your benefit. I have run into this often with clients of mine where the other company either does not want to own up to fault or delays the process.

Finally, a side note. When you do have to rely on your company to settle when it is not your fault, your deductibles will apply. Once your insurance company subrugates and receives the settlement they have to indemnify(reimburse) you first and will refund your deductible.

Sorry for the long post. If anyone would like some advice or have any insurance questions you can pm me. However, with that, there are many different laws and coverages from state to state, and some laws may be different here in Ohio than your own state. But still, I'm fairly familier with most states.

 

[Handbag Lady]

I dropped mine. I have coverage for "the other car" if I get in an accident, but my car will not be covered.

It is only worth about $500-1000 anyway and over two years, I've saved that in premiums. (My car is a 1995 Pontiac.)

 

[deerhart]

if you drop full coverage, you should put the difference between what you would have paid and what you did pay in the bank. This is to be your replacement fund if the non-covered car is "lost" or needs repaired.

We always dropped to liability when the cost of the vehicle got down to only a couple thousand. With that, even if I totaled a car, I would get next to nothing after my deductible. If its worth $1500 after you pay your $500 deductible, your only going to get $1000. If dropping full coverage saves me $40/month and I have it that way for 3 years, I have saved $1440.

Also the make of your car will really influence your insurance rates. We moved from Liability only on a 98 ford ranger to full coverage on a 05 Chrysler sebring convertible and my rates went up less then $50. When my 02 Taurus with 100k miles was totaled and I purchased a brand new HHR, my insurance rates actually dropped.

 

[lucigo]

My 18yo son was hit and his car totalled by a hit and run driver about 2 weeks ago. If we hadn't had full coverage we would have been out $4200, the amount they paid for his 2003 Accent. Now I'm reconsidering not having full coverage on all of our cars even though with 2 young drivers our insurance is $320 a month already!

 

[tinatark]

... However, some companies will also use market survey companies such as Total Logic and CCC to settle a claim on a totaled car.

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Finally, a side note. When you do have to rely on your company to settle when it is not your fault, your deductibles will apply. Once your insurance company subrugates and receives the settlement they have to indemnify(reimburse) you first and will refund your deductible.

....

First, CCC STINKS! Their comps were nowhere close to my car - a 2 owner, the first bought it brand new, the second owner bought it as a Toyota certified - it was in excellent condition - no dents, scratches, etc... they marked it "average" in all categories - their comps - 1 from a private owner, had been for sale for a long time - it was a teal green color, and didn't have any options. The other 2 were from buy here pay here dealers, one had a rebuilt title, the other, when I called the place, was "out for hail damage repair? I was so happy when I called my claims adjustor with my insurer on a Wednesday - he had a check for me, for the value of the car, plus loss of use reimbursement, on Friday.

Second, thanks! I don't think Farm Bureau has sent me my deductible back! I will call the adjustor on Monday!

 

[momdad4kids]

$210 per year is a good rate really. Im guessing its insured as a 2nd vehicle.Exactly how much extra is collission costing you? Even at half value of the premium thats still only $105 and if insurance even averages the cost of replacement to say around $3500 with $500 deductible your going to have to drive accident free for another 10 years to cover the cost of replacement over what you would save. I have 2000 Durango I use as a plow truck only , normally I drop covergae except fire and theft during the summer months but when i reinstate the policy collission is so miminmal i keep it on just in case anyway.The value of truck is really nothing but replacing it will still cost and with how my luck runs Id have a claim at the worst possible finnacial moment,LOL!