Car Insurance Advice

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Car Insurance Advice

Postby money » Fri May 03, 2013 2:12 pm

I have a 2000 Honda Accord, and I am currently paying a little over $80/month in insurance. I am wondering if it is time for me to change the policy to remove *collision coverage. I do not like the idea of dropping that coverage, but I feel like I am paying too much for car insurance for an older car. I am guessing my car is worth ~4-5k. I am already with a lower cost insurer and a $1k deductible.

*edit for clarification
Last edited by money on Fri May 03, 2013 2:32 pm, edited 1 time in total.
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Re: Car Insurance Advice

Postby jsl11 » Fri May 03, 2013 2:20 pm

What is the premium for the compehensive coverage alone? Your premium statement should itemize the coverages. That will tell you what you would save by dropping the coverage. I have a vehicle similar to yours. I keep the comprehensive coverage because it costs very little. You can probably also get some lower costs by paying your premium annually or semiannually instead of monthly.
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Re: Car Insurance Advice

Postby Quasimodo » Fri May 03, 2013 2:30 pm

A rule of thumb I've seen is that if your total comprehensive and collision premium exceeds 10 percent of the vehicle's market value, it's probably not worth your while to continue to carry these coverages.

Good luck whatever you decide!

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Re: Car Insurance Advice

Postby money » Fri May 03, 2013 2:38 pm

Sorry, I meant collision coverage (edited in OP). Collision is $151 and comprehensive is $26 for a 6 month duration. The 10% guideline is per year? Total collision + comprehensive is $354/yr.
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Re: Car Insurance Advice

Postby Quasimodo » Fri May 03, 2013 2:45 pm

Yes, my understanding is that the rule of thumb is a per year premium comparison to the value of the car.

Because comprehensive looks really inexpensive, and provides coverage for just about everything but collision (vandalism, theft, flood, fire among other perils), I'd be inclined to keep that coverage even if you decide to drop collision.

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Re: Car Insurance Advice

Postby jeffyscott » Fri May 03, 2013 3:38 pm

I think that "rule" is used by insurance agents in order to encourage over-insuring. Who totals their car once per decade? Also why would it be the market value rather than the amount you could collect? If you have $1000 deductible and the market value of your car is $1000, would you pay $100 per year for this coverage?

Assuming the car is worth $4500, with $1000 deductible the most you would collect from a collision would be $3500 and you are paying $354. While this does, perhaps, thus exceed a modified rule of thumb :?: , in any case this seems to me like too much to pay to avoid a small (at least to me) potential loss of $3500.

The decision should be more based on the impact of a ~$3500 loss, if that would be a minor financial blip then it is not worth insuring against, if it would ruin your life then it may be.
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Re: Car Insurance Advice

Postby alexnk » Fri May 03, 2013 3:39 pm

I might be wrong about this but a friend of mine, insurance agent, told me a while back that lowering your coverage drops your insurance score. If you think you are paying too much, and $80/month for 2000 Honda accord does seems a little excessive, check you credit score for errors, check credit Karma for estimated auto insurance score and if everything looks good shop around.
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Re: Car Insurance Advice

Postby scrabbler1 » Fri May 03, 2013 4:12 pm

I would make a decision on each coverage separately/ Comprehensive I would definitely keep because, as Quasimodo pointed out, it covers you for all the other causes of loss such as theft, vandalism, and glass (don't forget about glass - do you have full coverage on that high-frequency loss? If you use that 10% rule (not saying it is totally appropriate) then apply it only to Collision IMHO. With the $1,000 deductible, then $300 for a $3,500 max payout is just under 10% so it is a borderline call.
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Re: Car Insurance Advice

Postby nodenuff2 » Fri May 03, 2013 4:32 pm

If the 2000 honda were mine I would make sure I had Liability coverage medical coverage and uninsured motorist coverage. What ever happens the car has some value but not much. If you currently have Comp and a bad wndshield get it fixed before dropping the comp and collision coverages.
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Re: Car Insurance Advice

Postby jsl11 » Fri May 03, 2013 6:12 pm

money wrote:Sorry, I meant collision coverage (edited in OP). Collision is $151 and comprehensive is $26 for a 6 month duration. The 10% guideline is per year? Total collision + comprehensive is $354/yr.
Apparently, insurance is more expensive in your area than mine. For my 1999 Toyota, I pay about $100 per year for both comprehensive and collision. I also have very low deductables contrary to Boglehead wisdom. I do this because the cost is so low.
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Re: Car Insurance Advice

Postby mickeyd » Fri May 03, 2013 6:19 pm

I am wondering if it is time for me to change the policy to remove *collision coverage.


FWIW when I buy a new car I always include collision and comp. After about 3 years I delete collision but retain the comp. After about 3-5 more year the comp is deleted. Also I always have at least a $500 deductible and eventually increase that to $1K. I plan on keeping a new car at least 15 years.
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Re: Car Insurance Advice

Postby jon-nyc » Sat May 04, 2013 4:32 am

I'm liability only with a car of similar vintage. For me it's about not insuring a risk I can easily afford to take. Truth be told I never even asked about the price of those coverages when I got the car.
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Re: Car Insurance Advice

Postby Random Musings » Sat May 04, 2013 6:02 am

Do you have tort options - full tort can be quite a bit more expensive than limited tort.

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Re: Car Insurance Advice

Postby lwfitzge » Sat May 04, 2013 7:02 am

I drop collision at a value that I'm comfortable absorbing... usually $10k and less. The constant in my insurance philosophy re risk is liability protection and that's reflected in my car policies and having a separate umbrella policy.
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