Car insurance and dropping full coverage.

[greenmimama]

I just got off the phone with our ins. Agent and dropping full coverage on our 2003 mini van would only save us $33/mo.

I was expecting a larger savings, it seems like it might not be worth the savings, we are in MI and have state wide "no fault" insurance. I'm not sure if that makes it a lot more expensive or not.

Am I missing something? I know, ride a bike, it would certainly save money, we have 3 young children still in car seats, and live out in the country, so a vehicle is pretty needed to get most places, my DH does ride his bike to work about 3/4 of the year.

[mpg350]

All you are dropping is collision coverage so if you get in an accident and your at fault...you pay for the repair.

Your liability coverage will still be the same...that and your own personal injury coverage is what is expensive...especially in Michigan.

 

[Drifterrider]

I just got off the phone with our ins. Agent and dropping full coverage on our 2003 mini van would only save us $33/mo.

I was expecting a larger savings, it seems like it might not be worth the savings, we are in MI and have state wide "no fault" insurance. I'm not sure if that makes it a lot more expensive or not.

Am I missing something? I know, ride a bike, it would certainly save money, we have 3 young children still in car seats, and live out in the country, so a vehicle is pretty needed to get most places, my DH does ride his bike to work about 3/4 of the year.

$33 X 12 = $396

Is that just dropping collision or dropping comprehensive as well?

[Chris22]

Also consider by dropping collision you will be out of pocket for any repairs to the vehicle caused by someone else until reimbursed, vice your insurance paying for it and then going after the other guy (not sure how this changes in no-fault MI).  You'll get your money in the end, but it's a PITA. 

Personally, I don't agree with MMM on his whole self-insure thing when insurance is very inexpensive, unless your car is so old and worthless that anything will total it.  FWIW, my wife hit a deer last year with a 2008 120k mile VW Jetta.  Car was probably worth about $5500 retail and maybe $4500 on trade, maybe.  Insurance paid out about $7500.  With no collision or comprehensive it would have been a total loss.  $7500/6 years = $1250 a year, we pay about half that per month for collision/comprehensive on that car, so we were $~3k ahead.

[FiftyIsTheNewTwenty]

I've done the cheap car w/o comprehensive and so have a lot of friends, especially in Los Angeles, where insurance rates per year can approach the value of a cheap car.

Some friends kept a rolling wreck for local errands, but would rent for longer trips.

[dogboyslim]

For reference, I looked at the blue book value of a 2003 top of the line Honda Odyssey with 100k miles.  The current private sale value of this vehicle is $3,600.

The way both collision and comprehensive coverage works, you are paid the cost of damages, up to the actual cash value of your car.  The upper end of the amount you can recover for your claim on this vehicle would be in the $3,500 - $4,000 range.  Did your airbag deploy?  If so, your car is totaled and you get a check for $3,600 (minus the deductible) because the repair cost is going to be greater than the ACV.

If you have collision and comprehensive coverage, I'm guessing you also had a $500 deductible.  The maximum recovery under the policy is just over $3,000, and that amount drops as the ACV of the vehicle drops.  You are paying $33 a month ($396) a year for this coverage.  So if you net the deductible and the cost of the coverage, your max recovery is about $2,700.  If you can swing the $2,700, it is probably worthwhile to drop the coverage.  Consider it increasing your deductible from $500 to $4000.

For clarification, the no-fault aspect of your coverage is going to be on your PIP (Personal Injury Protection) coverage only, and isn't typically impacted by the presence of collision or comp.  You will still need to maintain Bodily Injury, Property Damage and PIP  coverage on your older vehicle.

[MrsPete]

Here's the real question:  If you were to wreck this car today and it were your fault, would you be financially able to replace the car?  If yes, you've done the right thing.  If no, or if replacing it would be overly difficult for you, get the insurance back. 

Having said that, I think you've done the right thing.  I've been driving for over 30 years and have never filed an insurance claim; thus, I've never recouped a single penny of the insurance premiums I've paid. 

[Elliot]

That's not a bad savings. Iirc, I only would save about 50 per year by dropping to liability only.

[slugline]

Having an auto that's not worth very much has its upside. Even if it's totaled, the insurance company isn't on the hook for very much, hence the low cost of coverage. My emergency fund is around for self-insurance for events like this.

[CATman]

Because of the no fault coverage and ridiculously high state minimum lifetime medical benefits, MI is the most expensive state in the country to insure a car.

[frugalnacho]

All you are dropping is collision coverage so if you get in an accident and your at fault...you pay for the repair.

Your liability coverage will still be the same...that and your own personal injury coverage is what is expensive...especially in Michigan.

That's not how it works in michigan.  It's "no fault", so it doesn't matter who is at fault your own insurance covers your own car.  So if you don't have full coverage and someone else smashes your car (100% their fault), tough titties, you are still responsible for the cost of your own repairs.

[Clever Name]

That seems like a pretty big savings to me. How much is your insurance currently? I only pay $46/month total with full coverage on a 2008 Honda Civic Hybrid.

[dogboyslim]

All you are dropping is collision coverage so if you get in an accident and your at fault...you pay for the repair.

Your liability coverage will still be the same...that and your own personal injury coverage is what is expensive...especially in Michigan.

That's not how it works in michigan.  It's "no fault", so it doesn't matter who is at fault your own insurance covers your own car.  So if you don't have full coverage and someone else smashes your car (100% their fault), tough titties, you are still responsible for the cost of your own repairs.

That's not exactly correct.  See: the Michigan website for a very good description of how no-fault works.  See the PPI and residual liability sections as they relate to the scenario described.

[frugalnacho]

All you are dropping is collision coverage so if you get in an accident and your at fault...you pay for the repair.

Your liability coverage will still be the same...that and your own personal injury coverage is what is expensive...especially in Michigan.

That's not how it works in michigan.  It's "no fault", so it doesn't matter who is at fault your own insurance covers your own car.  So if you don't have full coverage and someone else smashes your car (100% their fault), tough titties, you are still responsible for the cost of your own repairs.

That's not exactly correct.  See: the Michigan website for a very good description of how no-fault works.  See the PPI and residual liability sections as they relate to the scenario described.

I'm not an insurance expert, but as far as I know PPI is not full coverage and has nothing to do with the scenario described above. It's one of the 3 parts of liabilities that is the minimum requirement for everyone to have.  From the document you linked:

Property Protection (PPI)
No-fault will pay up to $1 million for damage your car does in Michigan to other people’s property, such as buildings and fences.  It will also pay for damage your car does to another person’s properly parked vehicle.  It does not pay for any other damage to cars.

Also from the document you linked:

Michigan law requires you to have no-fault automobile insurance on your car.  If you have an accident, this
required insurance pays for injuries to people and for damages your car does to other people’s property and
to properly parked cars.  IT DOES NOT PAY FOR ANY OTHER DAMAGE TO CARS. 
You must buy collision coverage if you want coverage for damage to your car in case of an accident.  The other
drivers’ insurance will not pay for damage to your car.
There are three kinds of collision insurance you can choose from: limited, standard, and broad form.  The chart tells you when each kind of insurance will pay YOU if your car is damaged in an accident.  Your collision coverage will not cover damage to
the other driver’s car.
REMEMBER, you are not required by law to have collision insurance, BUT YOU MUST HAVE COLLISION INSURANCE IF YOU WANT INSURANCE TO PAY FOR DAMAGES TO YOUR CAR RESULTING FROM AN ACCIDENT.

Everything in that document confirms what I originally said, except that in some situations your insurance company may get the other person's insurance to pay them for repairs (irrelevant detail IMO).

[dogboyslim]

Referencing this exemption to the right to sue from the link. Read as You may be sued for damages...

(d) for up to $1,000 if you are 50% or more at fault
in an accident which causes damages to another
person’s car which are not covered by
insurance.

in context of the statement

...So if you don't have full coverage and someone else smashes your car (100% their fault), tough titties, you are still responsible for the cost of your own repairs.

In that context, you may sue to recover up to $1,000 if you are not covered.  That's why I gave a qualified statement of "not exactly." to your statement and gave the reference.  I should have been more specific.  Apologies for any confusion.

The PPI I referenced because if your car is legally parked the other person's PPI will cover the damages.