When should you consider removing the collision coverage on a car?

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harrington
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When should you consider removing the collision coverage on a car?

Post by harrington » Tue Jun 05, 2018 12:34 pm

I drive a 2012 Fiat 500 with close to 110,000 miles on it. The car is in excellent condition but has an extremely low resale value which to me doesn't matter as I will probably drive it for at least 4 more years. My yearly insurance premium currently sits at right around $500/year. It would save me about $110 a year by eliminating the collision. Thoughts?

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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Tue Jun 05, 2018 12:36 pm

harrington wrote:
Tue Jun 05, 2018 12:34 pm
I drive a 2012 Fiat 500 with close to 110,000 miles on it. The car is in excellent condition but has an extremely low resale value which to me doesn't matter as I will probably drive it for at least 4 more years. My yearly insurance premium currently sits at right around $500/year. It would save me about $110 a year by eliminating the collision. Thoughts?
A bit surprised a 2012 model would have an extremely low resale value.. What is the number?

What do you have for collision deductible? I would recommend no lower than $1,000

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Re: When should you consider removing the collision coverage on a car?

Post by Jack FFR1846 » Tue Jun 05, 2018 12:50 pm

I removed collision right after our 04 outback was hit. Value was maybe $4k, $1800 insurance payout so I figure it's worth maybe $2k now. I fixed it via sledge hammer. If it's hit, stolen, burned or otherwise destroyed, it's going to become scrap metal.
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DanMahowny
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Re: When should you consider removing the collision coverage on a car?

Post by DanMahowny » Tue Jun 05, 2018 1:01 pm

I own a 2015 Subaru Forester and 2015 Honda Accord.

Liability insurance only, both vehicles.
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Rupert
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Re: When should you consider removing the collision coverage on a car?

Post by Rupert » Tue Jun 05, 2018 1:05 pm

Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.

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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Tue Jun 05, 2018 1:21 pm

Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
Yes - things to consider ...

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David Jay
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Re: When should you consider removing the collision coverage on a car?

Post by David Jay » Tue Jun 05, 2018 8:38 pm

I take it off when I could write a check to replace it without transferring money into my checking account. Somewhere about $3000 - $4000.

Insurance companies make money, I only insure things that would be painful to replace.
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Yossarian
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Re: When should you consider removing the collision coverage on a car?

Post by Yossarian » Tue Jun 05, 2018 8:43 pm

Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
This is the sole reason I added collision with a high deductible back to my car of about $8k value. I don't want to deal with chasing an at-fault driver's insurance company when they would have no motivation to deal with me.

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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Wed Jun 06, 2018 10:22 am

Yossarian wrote:
Tue Jun 05, 2018 8:43 pm
Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
This is the sole reason I added collision with a high deductible back to my car of about $8k value. I don't want to deal with chasing an at-fault driver's insurance company when they would have no motivation to deal with me.
We also took this factor into consideration in keeping collision coverage longer on one of our cars.

It also can be helpful when renting a car - BUT we now have the American Express coverage (no charge unless you rent the car using the Amex card) - which is per rental and not per day.

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Re: When should you consider removing the collision coverage on a car?

Post by frugalmama » Wed Jun 06, 2018 10:26 am

David Jay wrote:
Tue Jun 05, 2018 8:38 pm
I take it off when I could write a check to replace it without transferring money into my checking account. Somewhere about $3000 - $4000.

Insurance companies make money, I only insure things that would be painful to replace.
+1
We do have 1 vehicle with it still on it for the rental type of situation and the fact that the value of the vehicle is higher.

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Re: When should you consider removing the collision coverage on a car?

Post by thangngo » Wed Jun 06, 2018 11:04 am

harrington wrote:
Tue Jun 05, 2018 12:34 pm
I drive a 2012 Fiat 500 with close to 110,000 miles on it. The car is in excellent condition but has an extremely low resale value which to me doesn't matter as I will probably drive it for at least 4 more years. My yearly insurance premium currently sits at right around $500/year. It would save me about $110 a year by eliminating the collision. Thoughts?
I drop it as soon as I paid off the car loan, which is 5 months after purchase. I save as much as half the premium. I use Geico. I also added uninsured motorist property damage just in case the other guy doesn't have insurance. My yearly premium is sitting at $365/year.

jimmyrules712
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Re: When should you consider removing the collision coverage on a car?

Post by jimmyrules712 » Wed Jun 06, 2018 12:07 pm

I drop it when I felt like I could stomach having the car totaled and not getting anything from another party to compensate me for it. That number has varied as my financial security has changed but it's $5,000 at the low end and $10,000 at the high end.

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Re: When should you consider removing the collision coverage on a car?

Post by gwrvmd » Wed Jun 06, 2018 12:16 pm

My personal guideline is when the cars value drops below $5,000, I drop collision coverage....Gordon
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deanbrew
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Re: When should you consider removing the collision coverage on a car?

Post by deanbrew » Wed Jun 06, 2018 12:22 pm

DanMahowny wrote:
Tue Jun 05, 2018 1:01 pm
I own a 2015 Subaru Forester and 2015 Honda Accord.

Liability insurance only, both vehicles.
Wow. I would think this kind of sets the extreme for not having collision or comprehensive coverage. Personally, I don't drop collision coverage until my vehicle's value gets down to under $3,000. The annual premium savings just doesn't seem enough to make me drop it.
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Re: When should you consider removing the collision coverage on a car?

Post by B4Xt3r » Wed Jun 06, 2018 12:36 pm

David Jay wrote:
Tue Jun 05, 2018 8:38 pm
Insurance companies make money, I only insure things that would be painful to replace.

This. If the cost to replace is less than 10% of your liquid, non-retirement assets, insurance isn't "necessary" in my mind.

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David Jay
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Re: When should you consider removing the collision coverage on a car?

Post by David Jay » Wed Jun 06, 2018 12:46 pm

B4Xt3r wrote:
Wed Jun 06, 2018 12:36 pm
David Jay wrote:
Tue Jun 05, 2018 8:38 pm
Insurance companies make money, I only insure things that would be painful to replace.

This. If the cost to replace is less than 10% of your liquid, non-retirement assets, insurance isn't "necessary" in my mind.
That would be about $500 for me :(
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munemaker
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Re: When should you consider removing the collision coverage on a car?

Post by munemaker » Wed Jun 06, 2018 12:58 pm

I think a factor in this decision should be your exposure to an accident. How much do you drive and is it in an urban or rural area?

If you drive 200 miles/month in a rural area, your exposure is low.

If you are commuting daily in dense, urban traffic, your chance of being involved in an accident is much higher.

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Re: When should you consider removing the collision coverage on a car?

Post by neilpilot » Wed Jun 06, 2018 1:08 pm

munemaker wrote:
Wed Jun 06, 2018 12:58 pm
I think a factor in this decision should be your exposure to an accident. How much do you drive and is it in an urban or rural area?

If you drive 200 miles/month in a rural area, your exposure is low.

If you are commuting daily in dense, urban traffic, your chance of being involved in an accident is much higher.
Of course the same general factors are also used by the underwriter to set the collision premium. So in theory, those variables are already factored into the coverage.

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Re: When should you consider removing the collision coverage on a car?

Post by UALflyer » Wed Jun 06, 2018 1:15 pm

B4Xt3r wrote:
Wed Jun 06, 2018 12:36 pm
David Jay wrote:
Tue Jun 05, 2018 8:38 pm
Insurance companies make money, I only insure things that would be painful to replace.

This. If the cost to replace is less than 10% of your liquid, non-retirement assets, insurance isn't "necessary" in my mind.
To me, the decision has very little to do with whether I am able to absorb the loss, and a lot more to do with the cost of coverage, versus the probable amount of the payout and the likelihood that a claim would need to be made. For instance, if the coverage costs you $100/year and, after accounting for the deductible, the likely payout can be reasonably expected to be somewhere in the $3,000 range, just one such claim in the next 30 years would cause you to break even or to come out ahead. So, although insurance wouldn't be "necessary" in this situation, it'd be dumb not to have it.

Further, in addition to the rental car benefits and the options that it gives you even when another driver is at fault but his/her insurance company is dragging its feet, or trying to lowball you, there are other benefits to having collision coverage. If you have a relatively inexpensive car, even a small accident that does not impact its mechanical condition is very likely to cause it to be totaled. So, even small accidents are almost certain to result in a payout equal to the entire value of the car. Further, when you shop for car insurance, a lot of insurance companies take into account the company that you are with now, as well as your precise coverage levels. There are quite a few insurance companies that will not quote you their super preferred rates if you are currently with a high risk insurance company, and/or have no collision coverage, and/or have minimum liability coverage, etc... So, dropping collision coverage, while saving you some premium dollars now, can easily come back to cost you more down the road.
Last edited by UALflyer on Wed Jun 06, 2018 1:41 pm, edited 1 time in total.

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Re: When should you consider removing the collision coverage on a car?

Post by UALflyer » Wed Jun 06, 2018 1:41 pm

David Jay wrote:
Tue Jun 05, 2018 8:38 pm
I take it off when I could write a check to replace it without transferring money into my checking account. Somewhere about $3000 - $4000.

Insurance companies make money, I only insure things that would be painful to replace.
People get way too carried away thinking that they'll save money by eliminating insurance coverage. In calculating premiums, insurance companies have to use averages and their own, internal loss histories, but in a lot of cases their premium calculations and internal loss histories do not accurately represent your individual risk. It can cut both ways, as insurance companies both overprice and underprice individual risks all the time.

As I mentioned above, you should look not just at your ability to absorb the loss, but also on the cost of coverage, the probable payout and how often you'd need to make a claim to make the coverage worth the cost. Should you be paying $1,000/year in exchange for a possible $3,000 payout? With these numbers, in order for you to come out ahead or to break even, you'd need to make a claim in the next 3 years. Unless you really are a terrible driver and routinely drive in very high risk situations, this isn't an attractive proposition.

On the other hand, paying $100/year in exchange for a possible $3,000 payout requires you to make just one claim in the next 30 years to break even or to come out ahead. Given these numbers, you are exceedingly likely to come out ahead and would be crazy to turn down this coverage.

This isn't that different from other situations. For instance, on average banks make money on credit cards. Does this mean that even if you pay off your credit card in full every month, you should be foregoing a cashback credit card? Of course not, and it'd be dumb to do that. Insurance works very similarly, so, my recommendation is to worry a lot less about all the different ways that insurance companies make money, and a lot more about your individual numbers.

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Re: When should you consider removing the collision coverage on a car?

Post by thangngo » Wed Jun 06, 2018 3:36 pm

UALflyer wrote:
Wed Jun 06, 2018 1:41 pm
On the other hand, paying $100/year in exchange for a possible $3,000 payout requires you to make just one claim in the next 30 years to break even or to come out ahead. Given these numbers, you are exceedingly likely to come out ahead and would be crazy to turn down this coverage.

Question: assume that we don't drive a car for 30 years. Let's say we drive it for 10 years and have no claims of collision damage (a result of your fault). Would that be $1,000 down the drain? Once you get a new car, it's a whole total new calculation for collision coverage.

So should the denominator be the remaining years left on your vehicle?

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Re: When should you consider removing the collision coverage on a car?

Post by UALflyer » Wed Jun 06, 2018 3:56 pm

thangngo wrote:
Wed Jun 06, 2018 3:36 pm
UALflyer wrote:
Wed Jun 06, 2018 1:41 pm
On the other hand, paying $100/year in exchange for a possible $3,000 payout requires you to make just one claim in the next 30 years to break even or to come out ahead. Given these numbers, you are exceedingly likely to come out ahead and would be crazy to turn down this coverage.

Question: assume that we don't drive a car for 30 years. Let's say we drive it for 10 years and have no claims of collision damage (a result of your fault). Would that be $1,000 down the drain? Once you get a new car, it's a whole total new calculation for collision coverage.

So should the denominator be the remaining years left on your vehicle?
Good question, but no, that's not how you should be looking at it. Even if you only expect to drive a car for just one more year, a $100 premium for a $3,000 payout is an absolutely superb deal. In fact, you should always be evaluating this decision on an annual basis.

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Re: When should you consider removing the collision coverage on a car?

Post by B4Xt3r » Wed Jun 06, 2018 4:16 pm

David Jay wrote:
Wed Jun 06, 2018 12:46 pm
B4Xt3r wrote:
Wed Jun 06, 2018 12:36 pm
David Jay wrote:
Tue Jun 05, 2018 8:38 pm
Insurance companies make money, I only insure things that would be painful to replace.

This. If the cost to replace is less than 10% of your liquid, non-retirement assets, insurance isn't "necessary" in my mind.
That would be about $500 for me :(
In such a situation, I'd probably consider keeping it. Does your emergency fund cover a car replacement?

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Re: When should you consider removing the collision coverage on a car?

Post by jabberwockOG » Wed Jun 06, 2018 4:27 pm

In 40 years of driving neither my wife or I have ever had an at-fault accident claim.

In recent rears we elected to remove collision coverage on our cars - none of which is newer than a 2007. Two are high end luxury cars but given their age and our driving record we feel comfortable insuring ourselves in terms of at-fault collision. We do carry robust other auto and home insurance including an overall umbrella policy.

cashmoney
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Re: When should you consider removing the collision coverage on a car?

Post by cashmoney » Wed Jun 06, 2018 4:31 pm

I drive a vehicle worth about 5000 but haven't dropped collision yet ( would save about 80.00 on 1000 premium ) because I seem to get a crack in my windshield about every 18 month and it is covered 100% with no deductible in Florida.windshield claim doesn't effect premiums

harrington
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Re: When should you consider removing the collision coverage on a car?

Post by harrington » Wed Jun 06, 2018 4:51 pm

Great opinions everyone.....After reading all the comments I have decided it's not worth dropping the collision coverage.

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David Jay
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Re: When should you consider removing the collision coverage on a car?

Post by David Jay » Wed Jun 06, 2018 4:53 pm

B4Xt3r wrote:
Wed Jun 06, 2018 4:16 pm
David Jay wrote:
Wed Jun 06, 2018 12:46 pm
B4Xt3r wrote:
Wed Jun 06, 2018 12:36 pm
David Jay wrote:
Tue Jun 05, 2018 8:38 pm
Insurance companies make money, I only insure things that would be painful to replace.

This. If the cost to replace is less than 10% of your liquid, non-retirement assets, insurance isn't "necessary" in my mind.
That would be about $500 for me :(
In such a situation, I'd probably consider keeping it. Does your emergency fund cover a car replacement?
I am over 59.5 so I no longer maintain a discrete emergency fund.

I use a credit card for a small bill (under, say, $2000) and just cash flow it each month. For a big bill (up to $20K) I first take it from my HELOC and figure out where to take the withdrawal after-the-fact (Roth, tIRA, etc). I have essentially no taxable balances.
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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Wed Jun 06, 2018 5:18 pm

jabberwockOG wrote:
Wed Jun 06, 2018 4:27 pm
In 40 years of driving neither my wife or I have ever had an at-fault accident claim.
In recent rears we elected to remove collision coverage on our cars - none of which is newer than a 2007. Two are high end luxury cars but given their age and our driving record we feel comfortable insuring ourselves in terms of at-fault collision. We do carry robust other auto and home insurance including an overall umbrella policy.
Collision coverage is not just for "at fault" (yours) damage to the vehicle. It can cover hit and run damage as well as things like driving into an unavoidable hazard, such a a huge pothole. As others noted, if another driver is at fault, collecting on your collision can speed repairs and turn it over to your insurance company to get the other driver/company to pay up.

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Re: When should you consider removing the collision coverage on a car?

Post by jalbert » Wed Jun 06, 2018 5:50 pm

I kept collision coverage on a very old car so that I could also keep comprehensive coverage. The car was not worth a lot and collision with $1000 deductible was negligible cost for negligible coverage. But the comprehensive was zero deductible at reasonable cost so if someone smashed a window to take a bag I left on the seat, it was zero out of pocket cost for me.
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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Wed Jun 06, 2018 5:52 pm

jalbert wrote:
Wed Jun 06, 2018 5:50 pm
I kept collision coverage on a very old car so that I could also keep comprehensive coverage. The car was not worth a lot and collision with $1000 deductible was negligible cost for negligible coverage. But the comprehensive was zero deductible at reasonable cost so if someone smashed a window to take a bag I left on the seat, it was zero out of pocket cost for me.
On one of our older Camrys we have kept Comprehensive - but dropped collision. With State Farm (at least here in Virginia) you do not need Collision to keep Comprehensive.

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whodidntante
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Re: When should you consider removing the collision coverage on a car?

Post by whodidntante » Wed Jun 06, 2018 5:55 pm

The last time I dropped full coverage when the car became worth less than 15k.

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jabberwockOG
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Re: When should you consider removing the collision coverage on a car?

Post by jabberwockOG » Sun Jun 10, 2018 9:40 am

dm200 wrote:
Wed Jun 06, 2018 5:52 pm
jalbert wrote:
Wed Jun 06, 2018 5:50 pm
I kept collision coverage on a very old car so that I could also keep comprehensive coverage. The car was not worth a lot and collision with $1000 deductible was negligible cost for negligible coverage. But the comprehensive was zero deductible at reasonable cost so if someone smashed a window to take a bag I left on the seat, it was zero out of pocket cost for me.
On one of our older Camrys we have kept Comprehensive - but dropped collision. With State Farm (at least here in Virginia) you do not need Collision to keep Comprehensive.
Same here in our state we can drop collision and keep comprehensive. Comprehensive in almost all cases tends to be a smart bet given cost benefit ratio.

Paying for collision on an older car not so much especially for drivers with a long track record of no claims at all and adequate financial resources to self insure for repair or replacement. It is important to note that even with something like $1k deductible it is sometimes better to just pay for a repair rather than file a claim and then have your rates go up soon afterwards (very likely if there is another claim within a short period of time). As an example if car (worth $6K) needs $1800 dollars due to accident with $1k deductible it is most likely better to pay the $800 rather than make a collision claim to get $800. So on a low value car the actual amount that you would be claiming for reimbursement turns into a pretty narrow range. Having said that if drivers in the family have a track record of at least significant claim every few years it is likely better to stick with collision coverage.

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Re: When should you consider removing the collision coverage on a car?

Post by UALflyer » Mon Jun 11, 2018 6:45 am

jabberwockOG wrote:
Sun Jun 10, 2018 9:40 am
It is important to note that even with something like $1k deductible it is sometimes better to just pay for a repair rather than file a claim and then have your rates go up soon afterwards (very likely if there is another claim within a short period of time). As an example if car (worth $6K) needs $1800 dollars due to accident with $1k deductible it is most likely better to pay the $800 rather than make a collision claim to get $800.
I completely agree with your numbers, but in my experience, even very minor collision damage ends up running in the $2,500-$3,500 range, plus several hundred dollars in rental car costs.

Depending on the state, a $5K car that has sustained $3,500 in damage is likely to be totaled, so your claim would actually be for $5K (plus the rental car costs until the settlement is finalized).
So on a low value car the actual amount that you would be claiming for reimbursement turns into a pretty narrow range.
As I mentioned above, it tends to be the exact opposite, as a low value car is likely to be totaled by just about any collision, even a minor one, so just about any collision claim is very likely to be for the value of the entire car.

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Re: When should you consider removing the collision coverage on a car?

Post by NotWhoYouThink » Mon Jun 11, 2018 8:22 am

Yossarian wrote:
Tue Jun 05, 2018 8:43 pm
Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
This is the sole reason I added collision with a high deductible back to my car of about $8k value. I don't want to deal with chasing an at-fault driver's insurance company when they would have no motivation to deal with me.
We are dealing with this right now. Our insurance company is writing us a check for $1K medical expense plus the value of the car minus the deductible. In another 6-8-12 months or however long it takes, the other party's insurance will pay for the rest of the medical costs and the deductible. But right now she is telling her insurance company a story that differs from the story the 2 drivers she hit tell and the 3 eyewitnesses tell. The police accident report lists her at fault, but her insurance company is dragging its heels.

Even so, at about $8K value for the car, I would have preferred to drop collision years ago and maybe keep only uninsured driver coverage in addition to liability. But when you are married you compromise, and this time he gets to say he was right.

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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Mon Jun 11, 2018 11:10 am

NotWhoYouThink wrote:
Mon Jun 11, 2018 8:22 am
Yossarian wrote:
Tue Jun 05, 2018 8:43 pm
Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
This is the sole reason I added collision with a high deductible back to my car of about $8k value. I don't want to deal with chasing an at-fault driver's insurance company when they would have no motivation to deal with me.
We are dealing with this right now. Our insurance company is writing us a check for $1K medical expense plus the value of the car minus the deductible. In another 6-8-12 months or however long it takes, the other party's insurance will pay for the rest of the medical costs and the deductible. But right now she is telling her insurance company a story that differs from the story the 2 drivers she hit tell and the 3 eyewitnesses tell. The police accident report lists her at fault, but her insurance company is dragging its heels.
Even so, at about $8K value for the car, I would have preferred to drop collision years ago and maybe keep only uninsured driver coverage in addition to liability. But when you are married you compromise, and this time he gets to say he was right.
Yes -- ;)

I believe that in almost all cases, your insurance company's folks will be much, much better at "negotiating" with the at fault driver and his/her insurance company - let them do what they get paid for and are good at.

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Re: When should you consider removing the collision coverage on a car?

Post by clutchied » Mon Jun 11, 2018 1:26 pm

harrington wrote:
Tue Jun 05, 2018 12:34 pm
I drive a 2012 Fiat 500 with close to 110,000 miles on it. The car is in excellent condition but has an extremely low resale value which to me doesn't matter as I will probably drive it for at least 4 more years. My yearly insurance premium currently sits at right around $500/year. It would save me about $110 a year by eliminating the collision. Thoughts?
when the value on my cars drop below $10k. I drop collision and self insure.

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dm200
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Mon Jun 11, 2018 1:34 pm

About 35 years ago, I/we (with 2 cars) increased our collision and comprehensive deductibles to $1,000. My "logic" demonstrated that we would save quite a bit over the long term (and maybe short term). We had very late model vehicles at that point. We, then, had a run of paying the $1,000 3 or 4 times in 1-2 years. One time, our minivan was only out of the body shop for a week - when we had another expensive incident - and we had to fork out another $1,000. The body shop knew us so well - they would even take our personal check.

One expensive situation was very odd. My Toyota Corolla had an expensive to replace rear window (with the heat wires) and it was parked where I worked and an electrical transformer shorted out during a thunderstorm - and the resultant explosion vibrations caused that window to shatter into thousands of tiny pieces.

I kept telling myself = "You will be ahead - IN THE LONG RUN". So, not for the last 30+ years only one such expensive claim - Think "LONG RUN!!"

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Re: When should you consider removing the collision coverage on a car?

Post by munemaker » Mon Jun 11, 2018 1:38 pm

neilpilot wrote:
Wed Jun 06, 2018 1:08 pm
munemaker wrote:
Wed Jun 06, 2018 12:58 pm
I think a factor in this decision should be your exposure to an accident. How much do you drive and is it in an urban or rural area?

If you drive 200 miles/month in a rural area, your exposure is low.

If you are commuting daily in dense, urban traffic, your chance of being involved in an accident is much higher.
Of course the same general factors are also used by the underwriter to set the collision premium. So in theory, those variables are already factored into the coverage.
Maybe some do, but not in my case. I have never been asked how much I drive. When I retired, I called my agent, hoping for a reduction in premium. He said my policy does not consider miles driven, or whether you are working or retired.

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Re: When should you consider removing the collision coverage on a car?

Post by NotWhoYouThink » Mon Jun 11, 2018 1:51 pm

We do get low mileage discounts on 2 of our cars. Have to send in odometer readings every couple of years. High deductibles help, too.

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Re: When should you consider removing the collision coverage on a car?

Post by deanbrew » Mon Jun 11, 2018 1:57 pm

clutchied wrote:
Mon Jun 11, 2018 1:26 pm
when the value on my cars drop below $10k. I drop collision and self insure.
I understand the theory of self insuring, but when I checked with two different insurance companies two years in a row on one of my older cars, the savings for dropping collision was less than $200 per year. I don't consider saving $200 a year enough to expose myself to $9,000 potential loss (using your $10k less $1k deductible). Based on figures I've been given, I haven't drop collision until a car is worth less than $4k or so.
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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Mon Jun 11, 2018 1:59 pm

NotWhoYouThink wrote:
Mon Jun 11, 2018 1:51 pm
We do get low mileage discounts on 2 of our cars. Have to send in odometer readings every couple of years. High deductibles help, too.
Our State Farm (in Virginia) auto insurance has lower premiums if the annual mileage is under 7,500 miles per year.

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Re: When should you consider removing the collision coverage on a car?

Post by clutchied » Mon Jun 11, 2018 3:49 pm

deanbrew wrote:
Mon Jun 11, 2018 1:57 pm
clutchied wrote:
Mon Jun 11, 2018 1:26 pm
when the value on my cars drop below $10k. I drop collision and self insure.
I understand the theory of self insuring, but when I checked with two different insurance companies two years in a row on one of my older cars, the savings for dropping collision was less than $200 per year. I don't consider saving $200 a year enough to expose myself to $9,000 potential loss (using your $10k less $1k deductible). Based on figures I've been given, I haven't drop collision until a car is worth less than $4k or so.
it's just risk management and everyone has different thresholds.

mine is a bit higher?

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Re: When should you consider removing the collision coverage on a car?

Post by talzara » Mon Jun 11, 2018 4:51 pm

jabberwockOG wrote:
Sun Jun 10, 2018 9:40 am
It is important to note that even with something like $1k deductible it is sometimes better to just pay for a repair rather than file a claim and then have your rates go up soon afterwards (very likely if there is another claim within a short period of time). As an example if car (worth $6K) needs $1800 dollars due to accident with $1k deductible it is most likely better to pay the $800 rather than make a collision claim to get $800. So on a low value car the actual amount that you would be claiming for reimbursement turns into a pretty narrow range. Having said that if drivers in the family have a track record of at least significant claim every few years it is likely better to stick with collision coverage.
Insurance rates only take into account the number of claims, not the dollar amount. The average collision claim is $3,000, so you'll save money if you avoid filing claims that are much smaller than $3,000.

Some insurance companies do not surcharge the first claim. In that case, you would have to choose between using your freebie or saving it for a larger claim.

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Re: When should you consider removing the collision coverage on a car?

Post by talzara » Mon Jun 11, 2018 5:07 pm

munemaker wrote:
Mon Jun 11, 2018 1:38 pm
Maybe some do, but not in my case. I have never been asked how much I drive. When I retired, I called my agent, hoping for a reduction in premium. He said my policy does not consider miles driven, or whether you are working or retired.
NotWhoYouThink wrote:
Mon Jun 11, 2018 1:51 pm
We do get low mileage discounts on 2 of our cars. Have to send in odometer readings every couple of years. High deductibles help, too.
dm200 wrote:
Mon Jun 11, 2018 1:59 pm
Our State Farm (in Virginia) auto insurance has lower premiums if the annual mileage is under 7,500 miles per year.
In a traditional auto insurance policy, the low-mileage discount is only about 20%. Someone who drives 1 mile a year will pay 80% as much as someone who drives 12,000 miles.

To get bigger discounts, you have to switch to a Usage Based Insurance (UBI) or Pay Per Mile (PPM) policy. You have to give up some privacy and allow the insurance company to track your driving. In return, you can get low-mileage discounts of up to 30-70%.

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Re: When should you consider removing the collision coverage on a car?

Post by dm200 » Mon Jun 11, 2018 5:18 pm

talzara wrote:
Mon Jun 11, 2018 5:07 pm
munemaker wrote:
Mon Jun 11, 2018 1:38 pm
Maybe some do, but not in my case. I have never been asked how much I drive. When I retired, I called my agent, hoping for a reduction in premium. He said my policy does not consider miles driven, or whether you are working or retired.
NotWhoYouThink wrote:
Mon Jun 11, 2018 1:51 pm
We do get low mileage discounts on 2 of our cars. Have to send in odometer readings every couple of years. High deductibles help, too.
dm200 wrote:
Mon Jun 11, 2018 1:59 pm
Our State Farm (in Virginia) auto insurance has lower premiums if the annual mileage is under 7,500 miles per year.
In a traditional auto insurance policy, the low-mileage discount is only about 20%. Someone who drives 1 mile a year will pay 80% as much as someone who drives 12,000 miles.
To get bigger discounts, you have to switch to a Usage Based Insurance (UBI) or Pay Per Mile (PPM) policy. You have to give up some privacy and allow the insurance company to track your driving. In return, you can get low-mileage discounts of up to 30-70%.
Where (what companies) offer these?

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Re: When should you consider removing the collision coverage on a car?

Post by blaugranamd » Mon Jun 11, 2018 5:38 pm

Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
Wouldn't UMPD do something similar?
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Re: When should you consider removing the collision coverage on a car?

Post by talzara » Mon Jun 11, 2018 5:55 pm

dm200 wrote:
Mon Jun 11, 2018 5:18 pm
talzara wrote:
Mon Jun 11, 2018 5:07 pm
To get bigger discounts, you have to switch to a Usage Based Insurance (UBI) or Pay Per Mile (PPM) policy. You have to give up some privacy and allow the insurance company to track your driving. In return, you can get low-mileage discounts of up to 30-70%.
Where (what companies) offer these?
Most of the large insurance companies offer UBI policies. GEICO is the biggest holdout.

They market it as a reward for safe driving, and the tracking devices record data like acceleration and braking. They do not advertise the fact that mileage is one of the most important rate factors.

State Farm's UBI program is called Drive Safe & Save. The discount goes as high as 50%, and it is applied prospectively. They track you for 6 months, and you get the discount for the next 6 months. There's no risk, since you can cancel after 6 months if your discount is less than you were expecting.

Metromile is a PPM insurer that only operates in a few states. Virginia is one of them. The discount goes as high as 70%, and it's applied retrospectively. You pay 30% up-front, and they bill you for the actual mileage driven.

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Re: When should you consider removing the collision coverage on a car?

Post by scrabbler1 » Mon Jun 11, 2018 6:10 pm

I worked in the actuarial field for 23 years, specializing in personal auto insurance. I can tell you that no state ever required someone to buy Comprehensive and Collision. Both coverages are optional. Many policies in the data I reviewed included Comp but not Collision. As for UMPD, it varies a lot from state to state. Some states it is not available, other states it is mandatory, many states it is optional although sometimes it comes as part of a package with UMBI (Uninsured Motorists Bodily Injury). UMPD protects you in case the other driver is uninsured and at fault, and your car gets damaged. Hit-and-run is a common example. If you do drop Collision and UMPD is available, I think it is a good idea to buy the coverage. It is usually pretty cheap and will offer you some protection.

As for when you should drop Collision, it is a personal decision balancing risk versus premiums saved. I dropped Collision on my previous car when its book value dropped to about $2,000. I have seen suggestions to drop Collision when the ratio of the book value to the annual premium drops below some certain amount. But even if you drop Collision, I suggest you keep Comp because Comp tends to be much cheaper, and it protects you from the high-frequency but low-severity glass loss. And make sure your Comp coverage includes the full-coverage-glass option no matter which deductible you choose in general.

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Re: When should you consider removing the collision coverage on a car?

Post by gunn_show » Mon Jun 11, 2018 7:10 pm

munemaker wrote:
Wed Jun 06, 2018 12:58 pm
I think a factor in this decision should be your exposure to an accident. How much do you drive and is it in an urban or rural area?

If you drive 200 miles/month in a rural area, your exposure is low.

If you are commuting daily in dense, urban traffic, your chance of being involved in an accident is much higher.
I have a pair of 2007 Lexus vehicles we bought in the last 12-18 months, about $11-12k each, cash. Have not carried collision coverage on either. We both work from home, drive 3-4000 miles per year, and thus exposure to at-fault accidents are minimal. If we had one, and the cost to repair was too high, I would scrap the vehicle and buy another just like it on Craigslist by the weekend. Solid, decent-mileage, high-end, Lexus cars are available by the hundred on c-list by folks trading them in at the 100k mark to get the newest model. You can get $50k new cars for a fraction of the price with tons of life left. I have two of them and love 'em. This M.O. may not work for you if you prefer brand new vehicles all the time, but it's a great business model to buy used vehicles at the lowest total cost (low initial car acquisition cost, low ongoing insurance cost).

That's when I roll with no collision coverage (I do carry comp for theft, however, since it is minimal cost on cars this age). Basically when I can afford to buy the replacement car rather than mess with an accident cost (if I ever have one).
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Re: When should you consider removing the collision coverage on a car?

Post by Rupert » Tue Jun 12, 2018 7:30 am

blaugranamd wrote:
Mon Jun 11, 2018 5:38 pm
Rupert wrote:
Tue Jun 05, 2018 1:05 pm
Just a couple of things to think about before dropping coverage . . . Collision coverage has some value beyond repairing your car in the event of an at-fault accident. It also entitles you to representation by your insurance company in the event of a not-at-fault accident, i.e., you can file a claim on your own insurance in a not-at-fault accident and have your insurance company collect from the other driver/other driver's insurance company via subrogation. This can be very helpful at times. Maintaining at least one collision policy, if you have multiple vehicles, is also a good idea if you frequently rent cars.
Wouldn't UMPD do something similar?
No, UMPD applies when the other driver does not have insurance. I'm talking about the situation where the at-fault driver has insurance but you don't want to file directly on their insurance. If you have collision coverage, you can file on your own collision policy instead and let your insurance company go after the other party via subrogation. This often results in your car being fixed faster and less hassle for you in general. You do not have this option if you drop collision coverage on your vehicle.

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