Collision Insurance

[Dezrah]

I have a 2006 Honda Accord Hybrid with about 105k miles on it.  There is no debt tied in with the car.  My plans are to keep the car until it costs more to fix it than it's worth.  Hopefully that's a good 10+ years from now. 

My question is this, at what point does it make sense to drop my collision insurance and go to liability insurance only?

I can provide additional information if it's relevant.  Thanks.

[FIPurpose]

Probably having a current difference in what the cost would be between the two would be helpful.

[Dezrah]

Probably having a current difference in what the cost would be between the two would be helpful.

My breakdown is as follows.  These are costs per year.

Liability -- $272.50
Comprehensive -- $138.64 ($500 deductible)
Collision -- $220.40 ($500 deductible)
Rental Reimbursement -- $62.26 (forgot I even had this, I will definitely drop this and bum rides from my husband if needed.)

So about $359.04 per year plus a $500 deductible to insure vehicle replacement for what I feel is a quality car.  Seems like a good deal when I glance at it, but I'm curious what others think.

[Exflyboy]

Can you/your hubby fix your car if you crashed it?

or..Could you buy another car out of savings (for $2000 say) if you wrote yours off?

If so why have collision coverage?

Frank

[Dezrah]

Can you/your hubby fix your car if you crashed it?

or..Could you buy another car out of savings (for $2000 say) if you wrote yours off?

If so why have collision coverage?

Frank

Unfortunately neither of us has any skill at car repair.  This is something I hope to change in the future, but at this moment, definitely no.

To your other question, yes, we do keep enough cash on hand that we could buy a beater car outright or at least finance something reasonable.  My thinking is that there is still many thousands of dollars of value in the Accord right now and if it were say stolen from my apartment complex one night I would just be out money.  I wouldn’t feel too bad about losing $1k or even $2k, but I think at the moment it’s worth more.  This is what’s stuck in my head at least, whether it’s right or wrong.

I don’t mind being challenged in this assumption if in fact it simply makes more sense to drop it.

[Jamesqf]

My thinking is that there is still many thousands of dollars of value in the Accord right now and if it were say stolen from my apartment complex one night I would just be out money.  I wouldn’t feel too bad about losing $1k or even $2k...

The point here is that you are losing money either way, either in one big chunk (if the car is wrecked/stolen) or in small chunks every time you make an insurance payment.  The insurance company is going to make sure that, on average, what you pay for the insurance is more than the expected loss, so you are financially always better off not having the insurance, as long as you can afford a replacement.

Now whether the amount you pay to feel better about not having the chance of that big loss is worth it in emotional terms is something only you can answer.

[Dezrah]

The point here is that you are losing money either way, either in one big chunk (if the car is wrecked/stolen) or in small chunks every time you make an insurance payment.  ...

Now whether the amount you pay to feel better about not having the chance of that big loss is worth it in emotional terms is something only you can answer.

Thank you, Jamesqf.  This was exactly the kind of rephrasing I needed.  You're right, I can either lose my money slowly (guaranteed) by paying higher insurance, or quickly (maybe) in the event it is wrecked or stolen.  I've played out the scenarios in my head a few times and I really would be A-okay financially and emotionally shelling out even big bucks for collision repairs or replacement. 

One of the definite benefits of adopting a high savings rate lifestyle is you always have the option of dropping your long term goals temporarily to catch up with urgent short term emergencies.

Thanks again.

[shadowmoss]

Also look at the blue book/edmunds/ value for the car as that is what the insurance will reimburse.  May not be what you value it to be.