Author Topic: Should I drop collision and comprehensive?  (Read 7203 times)

Tim1965

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Should I drop collision and comprehensive?
« on: August 31, 2015, 12:34:34 PM »
Currently pay $997 through Amica for a 2010 Nissan Versa. We put about 1,000 miles a year on it (we live in a walkable neighborhood with a subway stop). Five year old car now has about 6,000 miles on it.

Dumping collision and comprehensive would save us $515 a year. Kelley blue book of the car is around $10,000. So if the car were totaled, the $500 saved per year wouldn't seem like much.

On the other hand, the odds of totaling the car (especially given that we drive it maybe once a week, and never during rush hour) seem very very low.

Any thoughts?

protostache

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Re: Should I drop collision and comprehensive?
« Reply #1 on: August 31, 2015, 12:45:55 PM »
One buys insurance (above legally required minimums) to protect your stash against unlikely events. Are you willing to part with part of your stash to replace it if it does get totaled? That's the most important part of the equation, in my opinion.

bacchi

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Re: Should I drop collision and comprehensive?
« Reply #2 on: August 31, 2015, 12:50:42 PM »
That's a huge carrying cost for a car that gets 1000 miles/yr. Can you ditch it and go zipcar, car2go, and rental car for out-of-town trips?


Bracken_Joy

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Re: Should I drop collision and comprehensive?
« Reply #3 on: August 31, 2015, 12:54:02 PM »
If you drive that little, it seems like you have a couple options (ranked from most savings to least)

1- ditch the car. Rent when you need, use zipcar or similar for in town.
2- Put your car on one of those sites that lets other people use your car when you aren't using it. Then your insurance is through them, and your car makes money for it's own upkeep. I haven't done this, but a couple forum members have and it seems people are happy with the arrangement.
3- Look into a miles-based insurance like MetroMile.

Tim1965

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Re: Should I drop collision and comprehensive?
« Reply #4 on: August 31, 2015, 01:04:19 PM »
I should have mentioned--we don't want to ditch the car. We use it enough that renting a car for our twice yearly trips would more or less wipe out the savings, but more importantly, we have a four year old son and we want control over the installation of the car seat, we want it in case of emergency, and so on.

seattlecyclone

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Re: Should I drop collision and comprehensive?
« Reply #5 on: August 31, 2015, 01:05:35 PM »
Dumping collision and comprehensive would save us $515 a year. Kelley blue book of the car is around $10,000. So if the car were totaled, the $500 saved per year wouldn't seem like much.

On the other hand, the odds of totaling the car (especially given that we drive it maybe once a week, and never during rush hour) seem very very low.

These are the two conflicting things you have to work through when buying insurance. As you state, totalling your car would be expensive, but it's also unlikely. Insurance exists to make sure that unlikely events aren't catastrophic. The insurance company collects premiums from a whole bunch of people, skims some off the top for expenses and profit, and then pays the rest out to the unlucky ones who have the unlikely event happen to them.

The key thing to note about this is that the insurance company pays back less to customers than it collects. When I was in high school we had an auto insurance actuary give a guest presentation to our statistics class and he said his employer paid back about 60% of collected premiums to its customers who had a covered loss. On average this is about what you would expect to receive back over a lifetime of driving, paying insurance premiums, and occasionally getting into a wreck. Since you drive much less than average (and most insurance companies don't give much of a discount for driving less than average), you would probably expect to receive even less than this.

The question then becomes this: how much would a total loss of your automobile affect your overall financial health? If you're out of debt, have a pretty good stash going, and would buy a replacement vehicle of similar vintage, a crash probably wouldn't set you back very much, so you should cut back on your insurance and get that money working for you. If you're already in debt and would have to put a few months' worth of expenses on a credit card at 20% in the event of a loss, maybe keeping the insurance is a good idea.

rulesofacquisition

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Re: Should I drop collision and comprehensive?
« Reply #6 on: August 31, 2015, 01:15:50 PM »
http://livingstingy.blogspot.com/2009/08/when-do-you-drop-collision-and-comp.html

He also has info on uninsured motorist coverage dropping/keeping.

MissStache

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Re: Should I drop collision and comprehensive?
« Reply #7 on: August 31, 2015, 01:33:42 PM »
That's a really expensive rate, even if you drop comp and collision.  I pay a bit under $500 per year for comp and collision with low deductibles and huge liability coverage.  Have you tried shopping for lower rates?

Tim1965

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Re: Should I drop collision and comprehensive?
« Reply #8 on: August 31, 2015, 01:40:03 PM »
I live in a very densely populated urban area, so yes, insurance is expensive generally. I haven't spent a ton of time shopping around but when I have I haven't seen anything dramatically cheaper than what I'm already paying.

MissStache

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Re: Should I drop collision and comprehensive?
« Reply #9 on: August 31, 2015, 01:44:39 PM »
Me too, right in the middle of Washington, DC :)

I was actually surprised that my rates WENT DOWN when I moved into the city from a VA suburb.  Sometimes you get nice surprises.  I'd hit up the big ones- State Farm, GEICO, Progressive, Farmer's, Allstate and then maybe some of the smaller ones that are specific to your area.  They are always changing their rate structures, so you might catch one in the middle of a rate reduction and get a good deal.  Worth shopping around if it can save you a few hundred bucks!

Tim1965

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Re: Should I drop collision and comprehensive?
« Reply #10 on: August 31, 2015, 01:49:22 PM »
Interesting. It's been years since I asked around so maybe I'll check in with a few of those places. Thanks!

Exflyboy

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Re: Should I drop collision and comprehensive?
« Reply #11 on: August 31, 2015, 01:57:36 PM »
Self insurance as posted above is stash size dependent.

we have a 3 year old Chevvy cruze worth maybe what we paid for it i.e $12k. we do about 15k miles with it.. If it gets crashed I have two options

1) repair the bodywork myself (I'm pretty good at it)
2) scrap it and buy another one..

my Wife was alarmed at this prospect but our stash is roughly $2m if we cashed in my pension.. So for the smallish risk of being crashed beyond repair this seemed like a pretty risk to our financial well being.

takeahike

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Re: Should I drop collision and comprehensive?
« Reply #12 on: August 31, 2015, 02:00:45 PM »
I had the freakiest thing happen to my car a couple of years ago. It was just a few years old. I had it parked in an apartment parking lot while I was travelling. Came back to a completely flooded car. Freakish winds and storms pushed tidal water up into the parking lot and drowned my car. No one was there to move it. Luckily, I had full coverage. I'm too paranoid to not carry it now. I just purchased a 2010 vehicle and put full coverage on it. I think once it's in the 6K value area I'll feel beter about dropping full on it.

Frankies Girl

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Re: Should I drop collision and comprehensive?
« Reply #13 on: August 31, 2015, 02:17:47 PM »
Shop around.

I agree that the rate you're paying is outrageous. I live in a very dense city that is known for driving everywhere... and my rate for two vehicles (one fully covered with all the bells and whistles and even a form of extended warranty covering the one vehicle for 10 years) is around $550/yr (including breakdown/lockout assistance through the insurer).



My insurance comfort level is when the car drops below 10K in value, it goes to liability only. I can come up with replacement vehicle $$ pretty fast at this point, and the chances of myself or the husband being the "at fault" driver where we would have to pay out to replace our own vehicle are extremely low, so I'd take the odds that it would not happen. UNLESS I could find a super cheap full coverage... in which case I might just continue paying for that for a few more years.
« Last Edit: August 31, 2015, 02:19:34 PM by Frankies Girl »

zinethstache

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Re: Should I drop collision and comprehensive?
« Reply #14 on: August 31, 2015, 03:26:26 PM »
One scenario to look out for that I've experienced is this, if you drop the coverage that fixes your car, you lose is your insurance going to bat for you. My husband and I have been in two accidents in the last 25 years. In each case it was clearly not our fault, but the other drivers insurance would not accept liability. If you don't have this coverage, you are out your money unless you want to take them to court to fight it (subrogation as the insurance companies call it).

One vehicle was totaled, payout was 15k the other was just about totalled, payout 5.2k.

So consider that if you are hit, the other drivers insurance could very well deny liability, making your insurance company go through the work to get paid. And in the case of not being covered YOU jumping through hoops on your own to get paid.

In both cases the other driver was found guilty and we recouped all costs.

Good luck!

I am in a high density area, and also pay around 5-600/year for each vehicle.

Now we have many policies with our insurance company and do get a big discount, perhaps that is not being considered here if you are only insuring one car.

We have our home, rental properties, a liability rider and 3 vehicles on our policy.

MissStache

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Re: Should I drop collision and comprehensive?
« Reply #15 on: September 01, 2015, 07:02:40 AM »
One scenario to look out for that I've experienced is this, if you drop the coverage that fixes your car, you lose is your insurance going to bat for you. My husband and I have been in two accidents in the last 25 years. In each case it was clearly not our fault, but the other drivers insurance would not accept liability. If you don't have this coverage, you are out your money unless you want to take them to court to fight it (subrogation as the insurance companies call it).

One vehicle was totaled, payout was 15k the other was just about totalled, payout 5.2k.

So consider that if you are hit, the other drivers insurance could very well deny liability, making your insurance company go through the work to get paid. And in the case of not being covered YOU jumping through hoops on your own to get paid.

In both cases the other driver was found guilty and we recouped all costs.



This is EXACTLY why I still carry collision on my car, even though it isn't worth that much and it certainly wouldn't be a disaster if it got totaled.  I used to work in insurance claims, and I can't tell you how many times someone who was clearly not-at-fault got screwed by the other insurance company not accepting liability.  It always felt great when we could step in and fight for them.  If you don't carry collision and file though your own company, then your insurance company has no authority or legal right to intervene on your behalf. 

Tim1965

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Re: Should I drop collision and comprehensive?
« Reply #16 on: September 01, 2015, 07:12:04 AM »
Well, thanks to you guys for pointing out that my rate was so high. I realize now it's been quite a while since I shopped around. Geico is WAY cheaper and it looks like I can get some collision insurance and still pay less than $400.

Anybody have any experience with Geico?

MissStache

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Re: Should I drop collision and comprehensive?
« Reply #17 on: September 01, 2015, 07:34:15 AM »
Well, thanks to you guys for pointing out that my rate was so high. I realize now it's been quite a while since I shopped around. Geico is WAY cheaper and it looks like I can get some collision insurance and still pay less than $400.

Anybody have any experience with Geico?

I've had them for about 4 years and have always had good service.  I've never had an accident, but I have had to use roadside assistance three times and have always been pleased. 

Gone Fishing

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Re: Should I drop collision and comprehensive?
« Reply #18 on: September 01, 2015, 07:45:37 AM »
Interesting. It's been years since I asked around so maybe I'll check in with a few of those places. Thanks!

When you do, be sure to tell them how little you drive.

I'm a red panda

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Re: Should I drop collision and comprehensive?
« Reply #19 on: September 01, 2015, 08:07:04 AM »
Can you afford to replace the car if necessary?

If so, drop the insurance.

Bracken_Joy

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Re: Should I drop collision and comprehensive?
« Reply #20 on: September 01, 2015, 08:34:31 AM »
Well, thanks to you guys for pointing out that my rate was so high. I realize now it's been quite a while since I shopped around. Geico is WAY cheaper and it looks like I can get some collision insurance and still pay less than $400.

Anybody have any experience with Geico?

I've had them for about 4 years and have always had good service.  I've never had an accident, but I have had to use roadside assistance three times and have always been pleased.

I've heard using the roadside assistance counts as a claim, and it's better to pay for a separate AAA service. Any truth to this? (We opted not to have roadside on our insurance this time around, but my dad buys me AAA as a gift every year, so it's theoretical for me anyway at this point).

MissStache

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Re: Should I drop collision and comprehensive?
« Reply #21 on: September 01, 2015, 08:37:46 AM »
Well, thanks to you guys for pointing out that my rate was so high. I realize now it's been quite a while since I shopped around. Geico is WAY cheaper and it looks like I can get some collision insurance and still pay less than $400.

Anybody have any experience with Geico?

I've had them for about 4 years and have always had good service.  I've never had an accident, but I have had to use roadside assistance three times and have always been pleased.

I've heard using the roadside assistance counts as a claim, and it's better to pay for a separate AAA service. Any truth to this? (We opted not to have roadside on our insurance this time around, but my dad buys me AAA as a gift every year, so it's theoretical for me anyway at this point).

I don't think so.  I've never seen it impact my rates and haven't had a rate increase during my tenure with them.  I think it depends on state laws, but in most places a not-at-fault claim doesn't impact your rates, particularly if you stay under a $ amount threshold.  If you use it dozens of times maybe it would, but generally I wouldn't think so. 

Rosy

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Re: Should I drop collision and comprehensive?
« Reply #22 on: September 01, 2015, 09:05:16 AM »
I totally agree with everything bracken-joy said. (I used to be an insurance underwriter)

Carry comp and collision, the extra bucks are well worth it, if you should happen to be in an accident. The insurance will go to bat for you if the other insurance company denies liability - and you don't have to replace a 10K car from your own stash.

I have Geico - no issues for the past 10 years. I've used their road assistance about two or three times, quick, reliable and no increase or other adverse effect on my premiums.
They also give a military discount of 10%.


TheThirstyStag

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Re: Should I drop collision and comprehensive?
« Reply #23 on: September 01, 2015, 09:24:24 AM »
I hadn't heard of the issue with other companies denying liability - very interesting point.  I always reasoned that dropping comp/coll is all about the replacement cost of your own car.

What happens when you're not comp/coll covered and the other company denies liability?  Do you have to sue them?  What about in tort/limited tort states?  That is, if you carry limited tort and no comp/coll, AND the other driver's company denies liability, are you completely out of luck?  This sounds like an extraordinary vulnerability.

MissStache

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Re: Should I drop collision and comprehensive?
« Reply #24 on: September 01, 2015, 09:36:13 AM »

What happens when you're not comp/coll covered and the other company denies liability?  Do you have to sue them?  What about in tort/limited tort states?  That is, if you carry limited tort and no comp/coll, AND the other driver's company denies liability, are you completely out of luck?  This sounds like an extraordinary vulnerability.

Yes, you would have to sue the other insurance company/driver directly, which I imagine would be incredibly difficult, time-consuming, and expensive.  I wonder if there would even be many attorneys who would take a case like that, especially if you didn't have full tort to allow you to sue for pain and suffering. 

In the state I worked in, Tort was directly related to medical injuries, and generally your own PIP or Medical coverage would cover you, regardless of fault.  That coverage is usually required in states that offer PIP, so you should still get your medical bills paid regardless of the other company accepting liability.  At least up to your limits.  After you meet your PIP limits yes, you are out of luck.   

It is a huge vulnerability.  And I've seen it burn a lot of people. 

Tim1965

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Re: Should I drop collision and comprehensive?
« Reply #25 on: September 01, 2015, 10:10:10 AM »
Huge shout out to the MMM community. You just saved me about $600 a year. Switched to Geico. Decided to keep collision and comp for the reasons cited by a few posters above, and it was ridiculously cheap compared to what I'd been paying anyway. (Kept it cheap also by going with high deductibles.)

TheThirstyStag

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Re: Should I drop collision and comprehensive?
« Reply #26 on: September 01, 2015, 03:26:43 PM »
Then again, in the case that the other driver is at fault and their insurance company denies liability, isn't the situation identical to if it were entirely your fault (assuming no medical issues)?   Yes, your company can't go after them and you would have to sue them yourselves, but aren't we still in a situation where you presumably have a cheap car that you can replace yourself relatively painlessly? 

Here's how I was looking at it:  You take the $$ you save by not carrying comp/coll and put it in a self-insurance fund.  If you total your car and it's your fault, you replace it with the money you were saving over the past years by not carrying the extra coverage.  Now, all we're doing is adding another situation in which this might happen:  it's their fault but their company denies liability.   It still doesn't sound financially disastrous (but it still sucks big time). 

Tim1965

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Re: Should I drop collision and comprehensive?
« Reply #27 on: September 02, 2015, 08:13:26 AM »
Thirsty, that's a good point, but the insurance even with collision and comp was so much cheaper than what I'd been paying I figured I'd go for it anyway. I may dump it as the car gets a few years older.

Merrie

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Re: Should I drop collision and comprehensive?
« Reply #28 on: September 05, 2015, 10:47:35 AM »
One scenario to look out for that I've experienced is this, if you drop the coverage that fixes your car, you lose is your insurance going to bat for you. My husband and I have been in two accidents in the last 25 years. In each case it was clearly not our fault, but the other drivers insurance would not accept liability. If you don't have this coverage, you are out your money unless you want to take them to court to fight it (subrogation as the insurance companies call it).

One vehicle was totaled, payout was 15k the other was just about totalled, payout 5.2k.

So consider that if you are hit, the other drivers insurance could very well deny liability, making your insurance company go through the work to get paid. And in the case of not being covered YOU jumping through hoops on your own to get paid.

In both cases the other driver was found guilty and we recouped all costs.


Very interesting.

How does this work if you drop collision but keep comp? That's what I did on our 11 yo Corolla.

DoubleDown

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Re: Should I drop collision and comprehensive?
« Reply #29 on: September 05, 2015, 02:20:52 PM »
While you're at it, look at what it would cost you to decrease your comprehensive deductible. With Geico, you can play around with different levels of coverage right online. Lowering your comprehensive deductible often will only cost a few bucks. My former roommate (who was an insurance agent) keyed me in on this, and here's how it works:

1. Comprehensive insurance covers things like theft, broken windows, tree limb falls on the car, hail damage, keying, vandalism, chipped window from rocks being thrown up by trucks, etc.

2. Those things listed above are often right on the dividing line of costing the amount of a typical deductible -- say, $500 -- and the company knows this. Take a broken window which might cost $500 to fix: With a $500 deductible you won't make an insurance claim, thereby making your comprehensive insurance useless (but profitable for the company). You might not even make a claim with a $250 deductible knowing that your future rates might go up.

3. Those things listed above are almost always completely out of your control. I have almost 100% control over whether I cause an at-fault accident that damages my own car (collision coverage), and can therefore choose not to carry it because I know the likelihood I'll cause such an accident are extremely low (never had a claim in almost 30 years of driving). But I can't control theft, vandalism, hail, etc.

4. For literally only a few dollars extra, you can lower your comprehensive deductible to $100. Then you won't be shy about making a claim and getting your money's worth if something outside your control happens to your car.