When to drop auto coverage to liability only?

[WSUCoug1994]

Both of our cars were paid with cash.  My wifes Acura is on 2007 with 140,000 miles ($7500 value) and my Mercedes C-Class (pre-MMM) is a 2009 with 102,000 miles ($9500).

At what value do you believe it is worth making the move to liability only?  We will be taking both of these cars to at least 200,000 miles before getting our next vehicles.  We always buy used.  We have the cash to buy a new (used) car if something drastic was to happen to either vehicle.

[RWD]

Depends on your personal risk tolerance. Generally the time to remove coverage is when you wouldn't care about the difference between your deductible and the total value of the car.

I have our deductibles set at $2k and I dropped collision/comprehensive on our older vehicle when it was worth ~$3-4k.

[marielle]

I think you can drop to liability whenever you have the cash to replace the cars if both were to explode tomorrow. Otherwise it's just a money sink unless you have kids that are new drivers or something. The statistics heavily lean towards the insurance companies making money. It's still a gamble of course.

[hudsoncat]

Similar to what Marielle said, we switched to liability only when I had enough in the bank to purchase a car similar to what I have (make/model/year/mileage/condition) in cash. I'm not sure that's the 'right' answer, but it is what made me feel better. We are a one car family, so if something happened, we'd need to find something new fairly quickly.

[chasesfish]

I always say I'm going to drop it, then I never do.  10 and 15 year old car and both worth less than $7,500 now.  The cost just seems reasonable at 2% or so of the car's value and drivers in DFW are crazy

[SummerLovin]

I've been pondering this for a while and came across this article which has some good things to consider. It convinced me to drop down to liability.  http://www.insurancequotes.org/auto/5-things-to-consider-before-dropping-full-coverage/

[WSUCoug1994]

Thanks for the input team......I am still struggling but will take a look at this article.

[CanuckExpat]

If your car got wrecked or stolen tomorrow, would you need to replace it, and if so, would it cause you any problems to pay for the replacement yourself?

If the answer is no, you are fine with liability only. If the answer is yes, well maybe you shouldn't have such a luxurious car or clown car habit ;)

[Paul der Krake]

A rule of thumb that's as good as any: when the residual value minus the deductible drops to less than two months of savings.

[Mgmny]

My wifes Acura is on 2007 with 140,000 miles ($7500 value) .

RL? That's what I drive! (2006 though). Not many of us out there.

Anyways, my auto insurance through Geico is liked $340 for 6 months with comp, collision, full glass, and $500 deductibles. That's already under $50 a month - I really don't know how much lower it could go. Also, I have a tendency to use these things in Minnesota winters. I've smashed a couple cars hitting ice in my short 10 years of driving (though come to think of it, I haven't had an accident for about 5 years, so I must be getting better).

[RyanAtTanagra]

At what value do you believe it is worth making the move to liability only?

At the value I bought it.  I don't plan to ever own a car again that costs so much I feel the need to insure the car itself.  I bought my last car before I discovered frugality, and had a car loan, which required full coverage insurance.  I'm not sure which bothered me more, the loan or the stupid insurance.  It's a huge waste of money from multiple angles: it's a sign of paying too much for a car (imo), and paying 4x as much for insurance that you'll most likely never use.

If you can afford to replace the car, statistically you're better off not insuring it.  Unless you're a below average driver.  Even then, the insurance company probably knows that and is charging you more, so you're still better off not insuring.

[WSUCoug1994]

My wifes Acura is on 2007 with 140,000 miles ($7500 value) .

RL? That's what I drive! (2006 though). Not many of us out there.

Anyways, my auto insurance through Geico is liked $340 for 6 months with comp, collision, full glass, and $500 deductibles. That's already under $50 a month - I really don't know how much lower it could go. Also, I have a tendency to use these things in Minnesota winters. I've smashed a couple cars hitting ice in my short 10 years of driving (though come to think of it, I haven't had an accident for about 5 years, so I must be getting better).

MDX not RL ;)

[WSUCoug1994]

If your car got wrecked or stolen tomorrow, would you need to replace it, and if so, would it cause you any problems to pay for the replacement yourself?

If the answer is no, you are fine with liability only. If the answer is yes, well maybe you shouldn't have such a luxurious car or clown car habit ;)

I would have zero issues replacing either vehicle (we do need both vehicles) - the exception to that is I don't keep that much money liquid.  It would require the sale of investment assets and the fees/taxes associated with selling those assets.  My philosophy is that once the money is in the invested assets that I never take it out but it could be easily done. 

I also agree with the clown car habit comment - but we determined it is best to ride these out to end of life before making a new (used) purchase.

[WSUCoug1994]

At what value do you believe it is worth making the move to liability only?

At the value I bought it.  I don't plan to ever own a car again that costs so much I feel the need to insure the car itself.  I bought my last car before I discovered frugality, and had a car loan, which required full coverage insurance.  I'm not sure which bothered me more, the loan or the stupid insurance.  It's a huge waste of money from multiple angles: it's a sign of paying too much for a car (imo), and paying 4x as much for insurance that you'll most likely never use.

If you can afford to replace the car, statistically you're better off not insuring it.  Unless you're a below average driver.  Even then, the insurance company probably knows that and is charging you more, so you're still better off not insuring.

This is generally how I feel.  I don't feel like I ever get the value out of my insurance especially as these cars age.  I just don't want to be penny-wise and pound-foolish by moving to liability only if that is not the best financial move if something was to happen.  Outside of a cracked windshield we have never filed a claim with our auto insurance (or any insurance for that matter) in the last 15 years.

[Highbeam]

I tried to drop to just liability and uninsured motorist. The savings were ridiculously small. We've never made a claim but the extremely low cost of comprehensive makes us keep it despite the relatively low value of our vehicles.

Dropping to liability and uninsured sounds good but check first to see what the savings really are.

[MommyCake]

Highbeam is right.  After reading this thread yesterday, I dropped comprehensive on my older vehicle.  It is only saving me $3 and change a month.  I did it anyway, because I am positive NO ONE is going to want to steal it.  But about $40 for a year may be worth the peace of mind.  I did keep the comprehensive on the newer vehicle... just in case.

[Mr. Paws]

I bought a $5,000 car and went to liability only.  I have never been in a car wreck and if my car gets totaled, stolen, etc it would suck but i can easily replace it.  I could cover a more expensive car but i would be hesitant to drop coverage on a car that costs 10K or more though

[RWD]

Highbeam is right.  After reading this thread yesterday, I dropped comprehensive on my older vehicle.  It is only saving me $3 and change a month.  I did it anyway, because I am positive NO ONE is going to want to steal it.  But about $40 for a year may be worth the peace of mind.  I did keep the comprehensive on the newer vehicle... just in case.

Possibly worth it at $3/month. My auto insurance fixes rock chips in windshields for free (regardless of your deductible) if you have comprehensive.

[marielle]

To add collision and comprehensive it would be $200 a year to insure a car worth ~$3000 with a $1000 deductible. Yeah, not paying $200 a year to ensure $2000. With lowest deductibles, it's $424 a year to add collision/comp! Maybe it has something to do with being under 25, I don't know.

[Roots&Wings]

Recently dropped collision but kept comprehensive, vehicle value ~$4,500. If I'm an idiot and cause an at fault crash, I have no problem paying for the collision damage to my vehicle. If someone else is at fault, their insurance would cover the collision damage (or I'd be out of luck if they had no coverage and insurance could not recover damages). On the comprehensive side, if someone damages my car, for instance in a parking lot or if there's a freak hail storm, I'd be pissed off paying for it (and comprehensive coverage cost was nominal, so kept it).

If you ever plan to drive anyone else's car (e.g. friend, relative, rental car), just ensure your coverage is sufficient since you/your insurance are on the hook if anything happens while you're driving their vehicle.

If I ever rent a car again, I'll add collision coverage for that timeframe, since the separate rental car insurance is usually insanely overpriced.

[Ocinfo]

If it's a sub $5k car and you have the money then no need to keep collision but should probably keep comprehensive for things like free glass chip repair. That being said, you'll probably save more by looking for a new and insurer on a regular basis. I switched to Geico and ended up paying around $240 for 6 months of full coverage with $500k limits on a 4 year old car worth around $10k. Makes no sense to drop coverage as the insurance is already cheap.


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