Author Topic: Comprehensive and collision coverage on auto insurance or not?  (Read 7525 times)

tkaraszewski

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Comprehensive and collision coverage on auto insurance or not?
« on: February 20, 2013, 10:01:52 AM »
So, say I have a car worth about $8500. I also have the following insurance quotes:

Liability, Uninsured Motorists, Roadside assistance (only): $99.84  6-months  ($16.64 monthly)
To include Comprehensive at $500 deductible, Collision at $1,000 ded: $222.85  6-months  ($37.14 monthly)

Would you spring for the comprehensive and collision coverage? It's not really very expensive, but I'm also not that likely to wreck the car in a way that does more than $1000 in damage to it. Hmm...

Spork

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #1 on: February 20, 2013, 10:19:52 AM »

I don't.  My "most expensive car" (and I use that term loosely) is an antique car.  I've wrecked it before (when I had comprehensive) and they didn't give me near what it was worth, nor enough to fix it.  I (stupidly) fixed it.  (I was young and dumb and emotionally attached to it).

The amount of comprehensive payments I had made on that car up to the point I wrecked it was more than it cost me to fix it.  Had I just made those payments to a "slush fund" I would have been golden.

Daley

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #2 on: February 20, 2013, 10:29:53 AM »
It depends on if you own it outright or are making payments on it. If you own it outright and feel comfortable "self insuring" on the comp and collision stuff, and the savings makes sense, go for it. If you owe money on the vehicle or you don't have the liquid assets to potentially eat repair or replacement on a totaled car under acts of G-d or theft, pay the extra, but set the deductible as high as you would feel comfortable paying out of pocket to keep rates lower through not filing claims.

Spork

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #3 on: February 20, 2013, 10:47:09 AM »
It depends on if you own it outright or are making payments on it.

Um, yeah, that.  I made the assumption this was paid for.  My philosophy in general on cars is:
1) if you can't pay cash for it, you can't afford it
2) if you can't wreck it and replace it, you can't afford it
3) if it requires a jumbo mortgage that would buy a middle class house, you're an idiot.

tkaraszewski

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #4 on: February 20, 2013, 11:15:29 AM »
Of course the car's paid for since I'm asking this question. I've never even heard of a lender that will give you a car loan and not *require* that you have comprehensive coverage until the car's paid off.

By the way, I'm asking about my specific situation, not just in general, which is why I included numbers.

TN_Steve

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #5 on: February 20, 2013, 11:25:09 AM »
So, say I have a car worth about $8500. I also have the following insurance quotes:

Liability, Uninsured Motorists, Roadside assistance (only): $99.84  6-months  ($16.64 monthly)
To include Comprehensive at $500 deductible, Collision at $1,000 ded: $222.85  6-months  ($37.14 monthly)

Would you spring for the comprehensive and collision coverage? It's not really very expensive, but I'm also not that likely to wreck the car in a way that does more than $1000 in damage to it. Hmm...

If a "Big Tree" falls on it, do you have the liquid assets to buy another car?  (a less expensive car would be ok here)

If the answer is yes--drop the comprehensive/collision.  "Don't buy insurance for things that you can [comfortably/easily?] afford to buy out of pocket."

Jack

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #6 on: February 20, 2013, 11:30:56 AM »
Of course the car's paid for since I'm asking this question. I've never even heard of a lender that will give you a car loan and not *require* that you have comprehensive coverage until the car's paid off.

By the way, I'm asking about my specific situation, not just in general, which is why I included numbers.

Using your specific numbers and a 0% interest rate (for simplicity, but it's pretty close to reality since it'd be coming out of your emergency fund), it makes sense for you to buy the insurance if you total your vehicle more than once every 366 months.

My calculation was: (car value - deductible) / (difference in monthly premiums with or without collision) = (number of months to break-even)

(That seems like too good a deal for collision/comprehensive insurance; did I make a mistake?)
« Last Edit: February 20, 2013, 11:37:47 AM by Jack »

joseph100

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #7 on: March 07, 2013, 12:45:39 AM »
Dropping comprehensive and collision is ultimately a question of whether you can afford to pay the damages out of your own pocket when and if something should happen to your car. Do the math and figure out if the cost of repairs would exceed the current value of the car. If your answer is yes, then you might want to consider dropping it from your auto insurance coverage.

Snow White

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #8 on: March 07, 2013, 04:28:17 AM »
Hubby and I made the decision years ago to self insure our cars so we haven't paid for collision and comprehensive for a long time.  You can't do this if you have a car loan but we always buy our cars for cash (usually used car) and we could absorb the cost if we totaled a car and had to replace.  The bottom line for us has always been whether or not it would create a hardship to have to repair or replace the vehicle ourselves.  We buy liability insurance of course as required by law.  Self-insuring has worked for us and saved us a lot of money but that can change in a moment if a car is damaged or destroyed!

Rural

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #9 on: March 07, 2013, 05:48:58 AM »
Liability only, though I do pay an additional ~20 a year for uninsured motorist insurance, since it seems to me that the worst drivers out there are likely to be the ones who've lost insurance (or, around here, insurance and license both).

You do need to be able to replace the car if you depend on it, but you don't have to replace it with something as nice in the short term.

Rural

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #10 on: March 07, 2013, 05:51:47 AM »
Another thought: we usually have a spare beater around that could be the backup vehicle if need be. Since we do need a truck for our current construction project but don't want to fork out for the diesel to commute in it, the truck is our current backup. It wouldn't be fun to commute in it (for more reasons than the fuel; it's a true work truck), but if we were to lose the commuter car, it would buy us the time to shop around for a replacement and would keep us from having to rent in the very short term.

chucklesmcgee

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #11 on: March 07, 2013, 03:46:13 PM »
So, say I have a car worth about $8500.
Would you spring for the comprehensive and collision coverage? It's not really very expensive, but I'm also not that likely to wreck the car in a way that does more than $1000 in damage to it. Hmm...

Not if I could afford an $8500 expense without wincing. Insurers are in the business to make money and know your odds of getting into a crash better than you can. Any insurance you take on is likely to end up costing you more in premiums than you get back in claims. So if you can comfortably afford the worst, there's no point in paying to protect yourself against it.

dragoncar

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #12 on: March 07, 2013, 06:57:07 PM »
Insurers are in the business to make money and know your odds of getting into a crash better than you can. Any insurance you take on is likely to end up costing you more in premiums than you get back in claims. So if you can comfortably afford the worst, there's no point in paying to protect yourself against it.

There is some information asymmetry.  For example, I may drive more recklessly than my record shows because I've been lucky the last few years.  I may have gotten into unreported accidents, etc.  This may mean that the insurance is discounted.

That said, I personally don't carry collision or comprehensive on my car.  If it got totaled, I probably wouldn't even buy a new one. Edit: I would wince, though.  I winced when I realized I dropped $80 in cash somewhere and it was gone forever.
« Last Edit: March 07, 2013, 07:00:27 PM by dragoncar »

Debbie M

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #13 on: March 10, 2013, 01:54:21 PM »
My calculation was: (car value - deductible) / (difference in monthly premiums with or without collision) = (number of months to break-even)

(That seems like too good a deal for collision/comprehensive insurance; did I make a mistake?)

One problem is that "car value" will not be the same for the whole 366 months.  But I'd say the answer still has value for now.  When the car value and/or premiums change, you re-do the calculation to find the new expected "months to break-even" (which is really the break-even vehicle totalling rate).  So long as you feel the months between vehicle totalling is less than the calculation, it could make sense to buy the insurance.

But how often do vehicles get totalled?  My cars have died of old age (stuff breaking faster than I could afford to fix it) or of someone else slamming into them.  But my part of the country also gets a lot of hail and I don't have a garage or carport.

Another issue is when the car isn't totalled--they pay some and then raise your rates some (I assume).  Another issue is that when the car is "totalled" (which just means that the cost to repair is more than the value of the pre-damage car), usually they take the car and you have to get another one (though sometimes they can be talked into letting you keep the car).

BlueMR2

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #14 on: March 10, 2013, 02:39:15 PM »
For me, if the car's worth less than $15k, then I don't need the collision/comprehensive on my car.  For my wife, well, I'm keeping it on down to $5k...

Difference is, she has bad things happen to her cars on a regular basis.  We're betting on her getting her money's worth out of it, whereas I won't.  That was the funniest part about getting married, everyone's like "hey, isn't it nice having lower insurance now".  Nope.  Not me.  My insurance rates went *up* when I got married.  :-)

Stachsquatch

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #15 on: March 10, 2013, 08:02:05 PM »
I don't bother with more insurance than is legally required.

Spork

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Re: Comprehensive and collision coverage on auto insurance or not?
« Reply #16 on: March 11, 2013, 07:25:19 AM »
Another issue is that when the car is "totalled" (which just means that the cost to repair is more than the value of the pre-damage car), usually they take the car and you have to get another one (though sometimes they can be talked into letting you keep the car).

Usually you have to "buy it back" from them.  I.e., they pay you "what it was worth before the wreck" and you pay them "what it is worth after the wreck".  Been there.