Author Topic: Auto Insurance: When to drop coverages; deductibles  (Read 4277 times)

Trudie

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Auto Insurance: When to drop coverages; deductibles
« on: June 17, 2014, 11:32:13 AM »
We have two cars for two people, and we need them both.  I commute to my job.  We paid cash for both of them and maintain them.

Car #1 is a 2007 Honda Fit with 63,000 miles.
Car #2 is a 2008 Hyundai Sonata with 108,000 miles.  (I rely on this one for my commute.)

Total annual premiums for both cars is around $900 split pretty evenly between the two vehicles.  I do shop insurance frequently and use an independent agent.

Both are valued around $7K each, give or take.  But I'm worried less about what I could get for them if I sold them then what my insurance company would give me for them.

Liability on them is 250/500 -- the minimum we can have (I think) with our umbrella liability policy.  We have a $2million umbrella.

We maintain a 1000 deductible on the Honda and a 500 deductible on the Hyundai.  Odds of something happening are much higher with the Hyundai.  It's driven more.

We live in an area with tons of deer (have to break for them regularly, but have never hit one... but such incidents are common).

How do you judge how high your deductibles should be?  When to drop everything but liability?

Cassie

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #1 on: June 17, 2014, 11:55:27 AM »
I drop liability when the vehicle is only worth about 2,000.  You might want to take a 1,000 deductible but only if it would drop your premium significantly.

frugaliknowit

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #2 on: June 17, 2014, 01:21:50 PM »
Rule of thumb is drop collision around 4 or 5 thousand.  You might ask your carrier, hypothetically speaking what you would net in a total.

Dulcimina

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #3 on: June 17, 2014, 01:45:15 PM »
I drop liability when the vehicle is only worth about 2,000.  You might want to take a 1,000 deductible but only if it would drop your premium significantly.
Did you mean comprehensive/collision? Every state requires liability at  minimum

swiper

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #4 on: June 17, 2014, 02:04:00 PM »
Curious why you guys picked 2K or 4-5K. I haven't had comprehensive on my cars for years. Unless your stash is very small, can't you justify taking the off-chance hit to save the premiums?

Unless you know something the insurance company doesn't (prone to deer damage could be such a thing).



mpg350

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #5 on: June 17, 2014, 03:03:14 PM »
I would keep the collision and comprehensive until the cars drop to under 3k and then just take the chance your not at fault
or the car isn't stollen.

I would also look to raise the deductible from $500 to a thousand and see how much that could save you….if not much
I would just keep it at $500.


Cassie

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #6 on: June 17, 2014, 04:07:57 PM »
Sorry I meant to say comprehensive not liability.  When I have checked the difference in premiums it is very small when the car gets older.  I don't think it is worth it to drop it until the car is only worth about 2,000. It could be different with other companies.

Eric

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #7 on: June 17, 2014, 04:19:18 PM »
Can you afford to buy a replacement car with cash?  Do you live outside of a no fault state?  If so, I'd drop all coverage above the minimum liability.  And raise the deductible to at least $1000 on both.  Consider that $1000 deductible would be plenty to cover most damage from a deer, so the only thing you're really insuring against is theft or a collision that's your fault and totals your car.

If you live in a no fault state, it's a little more difficult decision, as it's my understanding that you'll be shelling out for a new car even if an accident is not your fault without collision coverage.


Milspecstache

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Re: Auto Insurance: When to drop coverages; deductibles
« Reply #8 on: June 17, 2014, 05:11:34 PM »
I think dropping collision also depends on usage:
I have a truck that I use on my farm to haul materals, trash, hay, etc.  Since it only gets driven off the farm once per week I dropped collision on it, even though it is still worth $10k (value has actually started climbing the last 2 years).  It helps that it stays under a barn so it is protected from hail and tree limbs.  In a busy year I only put 5k miles on it.

The family car, however, gets driven a couple days a week and much further distances so I waited until about $3k to cancel it.  Just a higher risk due to the higher miles.

Definitely increase deductible to $1k as soon as you have that much in your savings to cover it.