Drop collision coverage on my 9yr old car?

[FIREin2018]

I have a 2015 Mazda3 with 150k miles.
Neighbors have told me their car insurance rates went up 25%+ with no claims. They said the insurance companies said it's now a lot more expensive in the past year to get cars fixed. (labor/parts)

My insurance renewal is in July so i havent gotten the bill yet.
But should i still carry collision insurance? (Will definitely keep comprehensive)

[Ron Scott]

I have a 2015 Mazda3 with 150k miles.
Neighbors have told me their car insurance rates went up 25%+ with no claims. They said the insurance companies said it's now a lot more expensive in the past year to get cars fixed. (labor/parts)

My insurance renewal is in July so i havent gotten the bill yet.
But should i still carry collision insurance? (Will definitely keep comprehensive)

Call the carrier and discuss options.

[Fomerly known as something]

I dropped both last month on my 2015 Renegade.  I keep mucho liability.  It’s based on the KBB value of the car now less than $15k.  That is an amount I can absorb if needed.

[Car Jack]

You really should look at what the rate is, what your deductible is and how that compares with your risk and the value of the car.

We just junked our 2013 Subaru Crosstrek with over 200k miles.  It had collision with a $1000 deductible right to the end.  Why?  The cost was like $50 a year and my younger son with the worst driving record in the house was driving it.  I mean, if it were $900, certainly, I'd drop it.  Also look at your deductible.  I see people with zero or $250 crying about their premium.  Well, why do you have such a low deductible?  Up it.  Hey, that's another consideration.  Up the deductible.

This helps if the car is totaled.  I have had 2 cars totaled (I have 2 sons....go figure) and the second car, for example was 10 years old so anything more than a scratch would total it.  It had a dented fender, and 2 dented doors.  Completely driveable.  They totaled the car and paid off double what the car was actually worth including me buying it back.  I spent $100 on pull-a-part door and fender (the other door was just paint damage) and we drove the car for another year before selling it because my other son bought his own car.  So this is a reason to keep it.  If you have a son, they're going to eventually crash the car, so why not get a pay off if it's cheap enough.

[lefty]

I think about this every few months. Have a 2014 Mazda 6 with low miles.
I feel insurance is a matter of confidence (and luck), but you could get unlucky. Don't think you can control luck but you can lower the risk with everything else I feel.

Considering that I don't drive a lot, avoid traffic congestions if I can help it, busy parking lots, drive defensively and I park far away from everyone (I could use the walk), insurance didn't seem worth it to me. So I dropped everything to bare bones state requirements in case I get pulled over and I'm asked for proof of insurance (which I have never been).
Foolish? Perhaps.

If I am unlucky, the payments (and opportunity cost) saved (and invested) that I didn't make to insurance would be used to get the car running again (may not look pretty). Buy the parts myself and get some garage tech off craigslist to get it installed (non cosmetic). Then life will go on as usual as long as the car is mechanically sound. I am not good at fixing cars and I don't wish to know how to fix them unless it's easy and I have to.

So I think maybe ask yourself about your driving habits and if you don't mind cosmetic damage if you get unlucky.

[ROF Expat]

Insurance companies make a lot of efforts, including hiring expert actuaries and statisticians, to make it as likely as possible that they will collect more in premiums from me than they pay out in benefits.  I believe them, so I only buy insurance where required by law, or where a loss would very substantially change my life.  I can easily afford to repair or replace my cars, so I don't bother with collision insurance. 

I have liability insurance for my car because it is required by law and America is a litigious place.  Getting sued for millions is a real risk and could seriously change my financial life, so I also have an umbrella policy.  I insure my house (with a very high deductible) because if my house burned down, although I could afford to replace it, it would seriously affect my retirement.  I have health insurance because a major car accident or cancer could change my financial life, even if I could probably afford to pay my bills out of pocket. 

Long ago, I did the math and realized that I would come out way ahead by never having collision insurance and just paying to repair or replace my car if I damage it.  22 years later, without an accident, it has turned out to be a good decision.  Your circumstances might be different.  I would look at my new insurance quote and do the math.  How many years of collision premiums would it take to add up to the value of your car?  (Don't forget to subtract your deductible and remember that the value of the payout will decline as the car depreciates.)  If you don't total it in that period of time, you lose money by having collision insurance. 

[LD_TAndK]

Get liability only insurance, only drive cars you can afford to replace out of pocket

MMM classic: https://www.mrmoneymustache.com/2011/06/02/insurance-a-tax-on-people-who-are-bad-at-math/

[clarkfan1979]

Insurance companies make a lot of efforts, including hiring expert actuaries and statisticians, to make it as likely as possible that they will collect more in premiums from me than they pay out in benefits.  I believe them, so I only buy insurance where required by law, or where a loss would very substantially change my life.  I can easily afford to repair or replace my cars, so I don't bother with collision insurance. 

I have liability insurance for my car because it is required by law and America is a litigious place.  Getting sued for millions is a real risk and could seriously change my financial life, so I also have an umbrella policy.  I insure my house (with a very high deductible) because if my house burned down, although I could afford to replace it, it would seriously affect my retirement.  I have health insurance because a major car accident or cancer could change my financial life, even if I could probably afford to pay my bills out of pocket. 

Long ago, I did the math and realized that I would come out way ahead by never having collision insurance and just paying to repair or replace my car if I damage it.  22 years later, without an accident, it has turned out to be a good decision.  Your circumstances might be different.  I would look at my new insurance quote and do the math.  How many years of collision premiums would it take to add up to the value of your car?  (Don't forget to subtract your deductible and remember that the value of the payout will decline as the car depreciates.)  If you don't total it in that period of time, you lose money by having collision insurance.

I'm 44 years old and have never hit anyone (with a car). I don't have collision insurance. I only have liability insurance and extra umbrella insurance (1 million). 

[jimmyshutter]

I bought a brand new car in 2009 with cash; no collision. Bought a brand new car 4 months ago again with cash; no collision.

Actually, the last time i had collision on a car was over 30 years ago so I figure I'm way ahead even if i totalled my current car. That's me, you have to decide for yourself. Only do what you're comfortable doing.

[seattlecyclone]

Insurance companies make a lot of efforts, including hiring expert actuaries and statisticians, to make it as likely as possible that they will collect more in premiums from me than they pay out in benefits.  I believe them, so I only buy insurance where required by law, or where a loss would very substantially change my life.  I can easily afford to repair or replace my cars, so I don't bother with collision insurance. 

Same. We've been liability-only on our old Prius for at least a decade. A couple years ago a pair of arguing kids in the back seat distracted my wife while driving, she rear-ended someone, and the repair bills easily outweighed several years' worth of the insurance savings.

On the other hand that's the first time in a combined 40+ years we've had driver's licenses where either of us damaged a car worse than the one time I backed into a post in a parking lot that I couldn't see through the rear window and did some cosmetic damage to the rear bumper.

You win some, you lose some. Over a lifetime of skipping unnecessary insurance (and extended warranties, etc.) you'll likely win more often than you lose (see above point about actuaries), but you also need to be prepared to dispassionately take the hit to your wallet in the times you lose. That can be hard for some people!

[roomtempmayo]

For most body damage, there's usually a cheap version of a fix: a mismatched panel from the junkyard, plungering out the dents yourself instead of getting them professionally fixed, using a touch-up pen to cover up a scratch enough so that it doesn't rust instead of heading to the paint shop, etcetera.   If you're willing to live with those sorts of fixes, I'd suggest collision isn't going to be worth it because the much higher costs of professional body work are built into that premium.

However, if not having everything just right is going to bug you, then insuring to cover all the pro body work isn't a bad idea.

[clarkfan1979]

For most body damage, there's usually a cheap version of a fix: a mismatched panel from the junkyard, plungering out the dents yourself instead of getting them professionally fixed, using a touch-up pen to cover up a scratch enough so that it doesn't rust instead of heading to the paint shop, etcetera.   If you're willing to live with those sorts of fixes, I'd suggest collision isn't going to be worth it because the much higher costs of professional body work are built into that premium.

However, if not having everything just right is going to bug you, then insuring to cover all the pro body work isn't a bad idea.

+1

[ROF Expat]

You win some, you lose some. Over a lifetime of skipping unnecessary insurance (and extended warranties, etc.) you'll likely win more often than you lose (see above point about actuaries), but you also need to be prepared to dispassionately take the hit to your wallet in the times you lose. That can be hard for some people!

It seems to me that you always win by choosing not to have insurance, because if you collect on your insurance often enough to come out ahead, you can be pretty confident that your rates will rise.  I think you can beat the house with life insurance (a pyrrhic victory, but they aren't going to raise your rates if  you collect...), but not with car insurance. 

That said, insurance is a useful tool as a hedge against a financial catastrophe.  For a lot of people, a badly damaged or totaled car would be a financial catastrophe, so insurance would make sense for them.

[RedmondStash]

I'm all for dropping collision insurance -- but I do wonder about the effects on car rentals. I think whatever car insurance you have is applied to rental cars too, no? So if you don't have collision insurance on your old beater, and you rent a car and get into an accident, you'd then be on the hook for expensive repairs unless you buy the rental company's exorbitant insurance.

[ROF Expat]

I'm all for dropping collision insurance -- but I do wonder about the effects on car rentals. I think whatever car insurance you have is applied to rental cars too, no? So if you don't have collision insurance on your old beater, and you rent a car and get into an accident, you'd then be on the hook for expensive repairs unless you buy the rental company's exorbitant insurance.

This is a legit point. 

Credit cards pretty commonly provide collision and theft insurance if you use them for your rental car (not all do, so it is worth checking to be sure).  This should make up the gap if you only have a liability policy for your regular car.
 
If you don't have insurance at all (for example, if you don't own a car) you still don't have to pay the rental car companies' exorbitant insurance rates.  You can buy rental car coverage from an insurance company for a lot less than you would pay at the rental desk. 

Since I live overseas, I don't have a regular US insurance policy.  Instead, I have a policy from USAA that gives me good liability coverage when I am in the US in any car as long as I don't own it (a rental car or a  car  I borrow from a friend, for example).  I think I pay about 25 dollars per year, which is less than a single day of insurance from a rental car company.  I use my USAA credit card for the booking, and  that covers collision and theft. 

[evanc]

My $.02: Yes, cancel! And yes, I dropped the collision on my own 9 yr old Subaru a few years ago based on CBA.

Paraphrasing here, but MMM (the man, the myth, the legend) himself said insurance is for people who are bad at math. One way to quantify the decision is login to your carrier's website and get a quote with the proposed omission of collision insurance - I have Progressive, and you can instantaneously receive this information. You will then have to evaluate the guaranteed savings on premiums against the unlikely (but possible) event you may have to come out of pocket to replace your vehicle.

I think what holds people back is the fear that if (and it's a big if) you get in a significant wreck, you will feel foolish for having foregone the insurance, because relative to replacing the vehicle, the premiums are so inexpensive. But keep in mind, the much more likely outcome is that you will experience no such event and therefore have saved a bundle on your premiums. All of that to say, it's ultimately risk tolerance. The math is simple and not in your favor.

Edit: typos

[roomtempmayo]

All of that to say, it's ultimately risk tolerance.

My in-laws spent their careers in insurance, and they've both said that rich people are almost always over-insured and poor people are almost always under-insured.

When you have money, you can afford to take risks.  When you're poor, you can't.

[achvfi]

That is about the time we cancelled collision as well. It was not worth it.

We still have the car.

[solon]

All of that to say, it's ultimately risk tolerance.

My in-laws spent their careers in insurance, and they've both said that rich people are almost always over-insured and poor people are almost always under-insured.

When you have money, you can afford to take risks.  When you're poor, you can't.

I would think it would go the other way. When you have money, you have a lot to lose. When you're poor, you don't.

[Much Fishing to Do]

You really should look at what the rate is, what your deductible is and how that compares with your risk and the value of the car.

We just junked our 2013 Subaru Crosstrek with over 200k miles.  It had collision with a $1000 deductible right to the end.  Why?  The cost was like $50 a year and my younger son with the worst driving record in the house was driving it.  I mean, if it were $900, certainly, I'd drop it.  Also look at your deductible.  I see people with zero or $250 crying about their premium.  Well, why do you have such a low deductible?  Up it.  Hey, that's another consideration.  Up the deductible.

This helps if the car is totaled.  I have had 2 cars totaled (I have 2 sons....go figure) and the second car, for example was 10 years old so anything more than a scratch would total it.  It had a dented fender, and 2 dented doors.  Completely driveable.  They totaled the car and paid off double what the car was actually worth including me buying it back.  I spent $100 on pull-a-part door and fender (the other door was just paint damage) and we drove the car for another year before selling it because my other son bought his own car.  So this is a reason to keep it.  If you have a son, they're going to eventually crash the car, so why not get a pay off if it's cheap enough.

+1 for thinking thru the costs vs. coverage in each situation.... I often drop collision when a car is no longer newish b/c I can certainly 'afford' to get one fixed/replaced....but given the rate we hit deer around here and the cost of body work now, comprehensive (which is what deer collisions fall under) is actually "cheap" in comparison....similarly we've gotten to the point we no longer really 'need' my life insurance....but given its a 30 year even term policy I've had for a long time now the premiums are extremely low for my age now, so I'll just keep it till it expires or I do

[achvfi]

All of that to say, it's ultimately risk tolerance.

My in-laws spent their careers in insurance, and they've both said that rich people are almost always over-insured and poor people are almost always under-insured.

When you have money, you can afford to take risks.  When you're poor, you can't.

I would think it would go the other way. When you have money, you have a lot to lose. When you're poor, you don't.

Yeah I think so too. But you could consider that a luxury spend. Something that keeps your mind at ease without much analysis.

[seattlecyclone]

All of that to say, it's ultimately risk tolerance.

My in-laws spent their careers in insurance, and they've both said that rich people are almost always over-insured and poor people are almost always under-insured.

When you have money, you can afford to take risks.  When you're poor, you can't.

I would think it would go the other way. When you have money, you have a lot to lose. When you're poor, you don't.

Different risks can be quantified differently. Collision insurance covers the value of your car. For a rich person this represents a much smaller fraction of their wealth than for a poor person, so the rich person might quite rationally skip that coverage. On the other hand liability insurance covers risks of owing potentially a few million dollars. This risk should be very concerning to someone who actually has a few million dollars, while someone who has very little has much less to lose by having very minimal liability insurance.

[RedmondStash]

I'm all for dropping collision insurance -- but I do wonder about the effects on car rentals. I think whatever car insurance you have is applied to rental cars too, no? So if you don't have collision insurance on your old beater, and you rent a car and get into an accident, you'd then be on the hook for expensive repairs unless you buy the rental company's exorbitant insurance.

This is a legit point. 

Credit cards pretty commonly provide collision and theft insurance if you use them for your rental car (not all do, so it is worth checking to be sure).  This should make up the gap if you only have a liability policy for your regular car.
 
If you don't have insurance at all (for example, if you don't own a car) you still don't have to pay the rental car companies' exorbitant insurance rates.  You can buy rental car coverage from an insurance company for a lot less than you would pay at the rental desk. 

Good to know.

[Not Sure]

I'm planning to drop comp/collision on my 4-year old car, FWIW.

[DrinkCoffeeStackMoney]

If the car is still in good shape and has a lot of life left I wouldn't drop your collision coverage.

We have a 9 year old Jeep Cherokee with 140k on it. It's been paid off for years and has been well maintained and is in excellent condition. Last March (2023) a 17 year old kid ran a stop light and I t-boned him. Of course the kid had no insurance so our insurance had to pick up the bill. Our car was within $1k of being totaled but we were able to get it fixed with our collision coverage. Without that collision coverage we'd have had to pay over $11k out of pocket to get our Jeep fixed, or we'd have had to spend thousands more to buy another vehicle. It's now 13 months later and our auto insurance on TWO vehicles went up a whopping $8 a months for both. I've also asked around since reading this post and I don't know of anyone who's had auto insurance go up more than 10% in the last year. A 25% increase sounds insane.

[Retire-Canada]

I have only had liability on my 2010 F150 for many years now. If something happened to it I could go and buy something else without noticing the change in my NW.

[Just Joe]

Thanks for the reminder y'all. I reviewed my policies on our vehicles and found some savings. Now I have to watch to make sure the agent actually follows through with my changes. Should save me a few hundred dollars in a year's time. 

[therethere]

I don't have collision coverage on my 2005 Subaru for this same reason. But I have considered adding it back on. If I remember correctly the cost is negligible, maybe +150 for 6 months.

 I live in a city with a ton of hit and runs, along with unregistered and uninsured vehicles. If I got hit by a car in one of those previous categories, would uninsured motorist cover me if I don't carry comprehensive/collision? What if it was a hit/run and the other car couldn't be found?

[ROF Expat]

I don't have collision coverage on my 2005 Subaru for this same reason. But I have considered adding it back on. If I remember correctly the cost is negligible, maybe +150 for 6 months.

 I live in a city with a ton of hit and runs, along with unregistered and uninsured vehicles. If I got hit by a car in one of those previous categories, would uninsured motorist cover me if I don't carry comprehensive/collision? What if it was a hit/run and the other car couldn't be found?

It seems like the cost is negligible because the benefit is negligible.  What's the value of a 20 year old Subaru?  Maybe $4,000?  And what's your deductible?  $500 or $1,000? 

So, you might pay $600 per year for a policy that could pay you $3,000 (assuming a $1k deductible), but less as the car depreciates.  In those circumstances, you come out ahead if you don't total your car in five years (without getting into opportunity cost).  If an uninsured motorist or hit and run does $1k worth of damage, you get nothing.  Obviously, the numbers will vary depending on your specific policy, but I think the example is illustrative.  If you save the $600 per year you don't spend on collision insurance, you can buy a replacement 20-year-old Subaru after 8 years or so.  If it  would be financially painful to repair or replace your car, then insurance makes sense.  If it would make you sleep better at night, $600 per year might be  money well spent.  I'm comfortable with skipping collision for myself, but YMMV. 

[therethere]

I don't have collision coverage on my 2005 Subaru for this same reason. But I have considered adding it back on. If I remember correctly the cost is negligible, maybe +150 for 6 months.

 I live in a city with a ton of hit and runs, along with unregistered and uninsured vehicles. If I got hit by a car in one of those previous categories, would uninsured motorist cover me if I don't carry comprehensive/collision? What if it was a hit/run and the other car couldn't be found?

It seems like the cost is negligible because the benefit is negligible.  What's the value of a 20 year old Subaru?  Maybe $4,000?  And what's your deductible?  $500 or $1,000? 

So, you might pay $600 per year for a policy that could pay you $3,000 (assuming a $1k deductible), but less as the car depreciates.  In those circumstances, you come out ahead if you don't total your car in five years (without getting into opportunity cost).  If an uninsured motorist or hit and run does $1k worth of damage, you get nothing.  Obviously, the numbers will vary depending on your specific policy, but I think the example is illustrative.  If you save the $600 per year you don't spend on collision insurance, you can buy a replacement 20-year-old Subaru after 8 years or so.  If it  would be financially painful to repair or replace your car, then insurance makes sense.  If it would make you sleep better at night, $600 per year might be  money well spent.  I'm comfortable with skipping collision for myself, but YMMV.

In this case the cost is only $200 per year. And on a 4-5k car, pretty much anything would total it. But on the flip side, If I did put in a claim I'd probably be paying higher rates for the 3 years after, adding some unknown costs but I'm guessing along the same lines as $200/year. I'm still undecided. Seems like at least 20% of the cars in this city have expired temp tags. We've also had 4-5 accidents occur overnight to parked cars immediately in front of my house. At least 2 of them completely totaled new cars.

I did realize I am signed up for this "Uninsured motorist property damage coverage (UMPD)" but I'm unsure if it applies if it is a hit and run, or a hit by a stolen vehicle (we're also a city with the highest rate of stolen cars). Let's hope I never have to find out.