dropping collision ins.

[crabbypatty]

I see this often, people saying that they have dropped collision. My car is about 9 years old and collision for it is $75 every 6 months with a 1k deductible.

Every fender bender I know of costs an outrageous amount to fix, it's very common to hear of repairs costing a few thousand. So how is dropping collision a good idea? For $150 a year, assuming it is not totaled, my car will be fixed if I am in an accident (plus the 1k ded). If I don't pay the $150 I will get nothing from the ins. co., and I'd be paying the 1k anyway plus the difference to repair my vehicle.

Am I missing an important factor here?

[Joan.of.the.Arch]

I don't think you are missing anything. It is just a question of williingness to take the risk of paying for one's own repairs or loss.

[cheapdoggy]

I don't want to take it off on my Tahoe. The truck is worth 7k.All I need is some moron to hit and run in a parking lot and I lose or same person's car is damaged where they can't run but maybe he has no insurance.No thanks I'll keep it.

[disneysteve]

There are a couple of rules of thumb.

1. Consider dropping collision coverage when your car is worth less than $2,000.

2. Consider dropping collision coverage when the premium is 10% or more of the car's value.

That said, neither is a great rule. Read this:
Property & Casualty Insurance: auto insurance

I think this gives a much better answer than just following the rules of thumb.

[34saving]

What's your 9 year old car worth? "Totaled" is a matter of value. $500 of damage will "total" a $500 car. So, if your car is only worth $2000-3000, which might be true depending on what you're driving, you might be spending $150 a year to insure $1000-$2000. (Which may or may not be worth it to you depending . . .) Also, usually collision only kicks in if it's your fault. Check your state/policy. (Even if you live in a "no-fault" state, that usually only applies to injuries.)

[MonkeyMama]

I have generally never had collision. We have a newer car today which is insured, but none of our other cars we ever paid more than $5k for or so. my general rule of thumb for any other car was to drop it at around $5k.

Many reasons. 1 - we always had plenty of money in the bank to replace. 2 - we have gone on about 14 years with no collision or no incidents. So an an annual basis the saving might not see much, but at this point (driving 14 years - 2 of us) we have saved enough money to buy a new car if need be. Just another angle. 3 - it's a game of odds. We have perfect driving records. Odds are slim we'd need it (knock on wood furiously). 4 - I was told here and also warned by my agent if I was involved in an accident it would be up to me to go after the other individual's insurance. I think this is somewhat of a scare tactic. My first car was hit 3 times - 100% other driver's fault and was never an issue. The car was maybe worth $1k and I collected $1k insurance on it for repairs 3 times without hardly lifting a finger. With 100% fault there was nothing they could do. I think it could get more iffy if the fault is split. But still, it is not impossible to defend yourself.

All that being said I do have comprehensive on my hubby's car (worth maybe $4k) because we live in a very high theft area. The insurance is dirt cheap and the odds are pretty high his car could be stolen. The odds seem worth it in this case.

When I look at the price of collision and the odds we would use the insurance, on a $4k car I Wouldn't bother, myself.

Finally, I could go out and find a really nice car for dirt cheap if my hubby's car met an early death. So this could be the biggest factor. I am not scared to buy a $1k or $3k car. The 2 cars we have had the longest were the oldest. If I felt my only option was to go shell out $20k for a new car, obviously I would feel different.

[nanamom]

I only carry it if the insurance is required by whoever is "helping" me pay for my car. If it were still really new when I am done with the gougers er ah I mean loan people then I might consider it but for an older car I don't. However I have a good driving record and if it were hit in a lot (fender bender) I'd probably dirive with a bad fender or check out the junk yards for a replacement part. I dont' care that much what the car looks like just that it gets us around safely.

[tgavin71]

For someone who is not in the US what exactly is "collison" for. Is it insurance for just your own car or is it for damage to other cars? Thanks

[Bookie]

Collision insurance pays for damage to your car, not the other guy's, and it's optional unless the lender on a financed vehicle requires it. (Most do.)

[tgavin71]

Thanks Bookie. We have it because for us it is worth it. But for younger inexperienced drivers a lot of the time their first car costs less than the insurance does.

[shelbylovesmelby]

We just stick w/ the state minimums on this end.

[wakkus]

I'm going to go out on a limb here and say that you shouldn't pay for anymore insurance than you legally have to, assuming that it wouldn't be a total disaster if something happened. For example, I carry bodily injury liability insurance because it would be totally catastrophic if I hit someone and they sued me for my entire nestegg. Oh, and it's the law too....

But for things like if I wreck someone else's car, or even better, my own, I have no intention of insuring. That because I know I could pay for a new car or fix one if it was involved in an accident. Since the value of the insurance claim on average must be less than what it's insuring (otherwise the insurance company wouldn't make money), I'm giving money away by insuring non catastrophic cases. Oh, and this insurance mind set goes towards a lot of things, such as extended warranties on things you buy at Best Buy, etc...

So, in the case of your car, assuming you can afford a new car and it won't kill you, I see no reason to have collision or comprehensive...

[bigsaver]

Here is my example. I have a 20 year old car of which is work about $2000, give or take since it is a luxury car so it still has some value. For me to have collision, my insurance would be about $1500 and with it would be $750. Thus, after 3 years of not having collision, I would have earned back the value of my car. Thus, you need to make a calculation of how many years of perfecting driving you need to come out ahead. I've already made my money back and more.

[deca]

My Saturn is only worth about $1500, I don't have collision coverage. My understanding is that if it got say $3K worth of damage I would still only get reimbursed up to its current resale value, not for the full cost of repairs. Doesn't seem like much benefit to me.

[cheapdoggy]

Deca you are right, only up to the book value of the car. I feel sometimes they"total cars" because it's cheaper in the long run.....
example
1999 Crudmobile book value $2500
Hit in rear by hit & run driver....estimate to repair $2000
If your insurance company inflates the estimate higher and totals it they give you $1500 for your 1999 Crudmobile. You are OK with that. After all you have a $1000 deductible
But then it gets interesting you turn the title over to the insurance company and they now sell your car for salvage at auction (now remember it was hit in the rear... the power train, computer,HVAC,radiator etc are all good.
The salvage value is probably $1000.
So total loss for the insurance co is $500 instead of $1000 ($2000 estimate minus $1000 deductible)
So imagine if you do that a couple hundred times a day.....