Fire and Theft Insurance

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norak
Posts: 229
Joined: Sat Aug 25, 2007 11:02 pm

Fire and Theft Insurance

Post by norak »

I have to make a decision about whether I should get fire and theft insurance, which will give me a payout if my car catches on fire or if it is stolen.

For too long I have purchased insurance because of fear invoked. People keep saying, "What if..." but if I were to insure myself against anything wrong that can happen, I'd go broke and in debt, so I need to look at the chances of an unfortunately event happening and balance it against the magnitude of loss.

I would like to know what the probability is of have your car stolen or getting caught on fire. If anyone can point me to statistics it would be great.

What kind of insurance do you have? How do you know if you are overinsured or underinsured?
"Divide what you have into seven parts, or even into eight, because you don't know what disaster may happen on earth." Ecclesiastes 11:2
rwwoods
Posts: 1312
Joined: Thu Jun 07, 2007 7:54 pm
Location: The Villages, Florida

Post by rwwoods »

Insurance should only be purchased if you cannot affort to take on the risk of loss yourself. Can you afford to repair or replace that $200 TV? Yes? So don't buy the repair policy from Best Buy/Circuit City/etc. The same logic applies to your other real assets. Most people need home fire insurance. Many people need car damage/theft insurance, but not all. it all depends on the replacement cost of the asset and the ability to self-insure for the loss. Only you can make that decision.
Grt2bOutdoors
Posts: 23156
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Fire and Theft Insurance

Post by Grt2bOutdoors »

norak wrote:I have to make a decision about whether I should get fire and theft insurance, which will give me a payout if my car catches on fire or if it is stolen.

For too long I have purchased insurance because of fear invoked. People keep saying, "What if..." but if I were to insure myself against anything wrong that can happen, I'd go broke and in debt, so I need to look at the chances of an unfortunately event happening and balance it against the magnitude of loss.

I would like to know what the probability is of have your car stolen or getting caught on fire. If anyone can point me to statistics it would be great.

What kind of insurance do you have? How do you know if you are overinsured or underinsured?
If your car is on the top 10 most stolen list, if you live on the east coast, esp. Jersey City or Newark and if as the other poster said; you can not afford to replace the car with your remaining assets - then IMO, I would get the comprehensive coverage.
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grabiner
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Location: Columbia, MD

Re: Fire and Theft Insurance

Post by grabiner »

norak wrote:I have to make a decision about whether I should get fire and theft insurance, which will give me a payout if my car catches on fire or if it is stolen.

For too long I have purchased insurance because of fear invoked. People keep saying, "What if..." but if I were to insure myself against anything wrong that can happen, I'd go broke and in debt, so I need to look at the chances of an unfortunately event happening and balance it against the magnitude of loss.

I would like to know what the probability is of have your car stolen or getting caught on fire. If anyone can point me to statistics it would be great.
Your insurance company probably knows this already. If they charge $100 for comprehensive coverage which will cost $10,000 if it pays out, then they must be estimating that your car has less than a 1% chance of being stolen or otherwise destroyed.

The "What if..." matters because of the potential effect of a loss. You do have liability insurance (and probably more than the legal minimum if you have any assets), because if you got into a car accident and someone else was injured, the lawsuit could bankrupt you if you are not insured. Whether you need collision and comprehensive insurance on your car depends on what would happen to you if the car were stolen or totaled in an accident. If you could easily afford to buy a comparable car, you don't need the insurance. If you couldn't easily afford to buy a new car but would have no problem paying $2000, then you should get the insurance but with a $1000 or $2000 deductible to lower the cost. If it's an old car, you don't have much to lose and the policy won't pay you much anyway, so you should drop collision and comprehensive coverage.
Wiki David Grabiner
sport
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Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Post by sport »

In my experience, comprehensive coverage is quite inexpensive. Even an old car can easily have a $5000 replacement value. I recommend the coverage if it does not cost too much.

Jeff
nwhitehe
Posts: 38
Joined: Wed Mar 14, 2007 11:44 pm

Post by nwhitehe »

I would say if you had to go into debt to buy the car, then perhaps get the insurance (shop around for the best rates). If you aren't in debt in general and could pay cash for a used replacement car of about the same quality without financial hardship, don't bother with extra insurance. Spend the money you save on more maintenance to keep the car working well (a better investment IMO).
Angel
Posts: 72
Joined: Fri Apr 27, 2007 10:44 pm

Post by Angel »

It depends on the value of your vehicle and whether or not you took out a loan to buy it. If you have a car loan, you probably signed a contract that states you must have physical damage coverage on the vehicle, which is comprehensive and collision coverage. If you don't provide the lender with proof of physical damage coverage, they could forceplace insurance on it which is very expensive. Most, if not all, insurance companies will not allow you to purchase collision insurance unless you have comprehensive coverage also.
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