Full comprehensive or liability only?

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silverskates
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Full comprehensive or liability only?

Post by silverskates » Mon Jun 19, 2017 12:20 pm

We just bought a used vehicle. It's a 2008, 32k miles, the body and inside are great but there are a few minor issues. We paid $5,000.

We currently use State Farm but are looking to switch to Geico. Here are the quotes we got from State Farm:

Full comprehensive - $291 every 6 months
Liability - $168 every 6 months

Since the car is old, which one should we pick?

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flamesabers
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Re: Full comprehensive or liability only?

Post by flamesabers » Mon Jun 19, 2017 1:19 pm

silverskates wrote:We just bought a used vehicle. It's a 2008, 32k miles, the body and inside are great but there are a few minor issues. We paid $5,000.

We currently use State Farm but are looking to switch to Geico. Here are the quotes we got from State Farm:

Full comprehensive - $291 every 6 months
Liability - $168 every 6 months

Since the car is old, which one should we pick?
Typically I don't think older cars with limited market value need comprehensive coverage.

One rule of thumb I've heard is you don't need full coverage if your annual premiums are greater then 10% of the market value of your car less the deductible.

Afull
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Re: Full comprehensive or liability only?

Post by Afull » Mon Jun 19, 2017 1:50 pm

flamesabers wrote:
silverskates wrote:We just bought a used vehicle. It's a 2008, 32k miles, the body and inside are great but there are a few minor issues. We paid $5,000.

We currently use State Farm but are looking to switch to Geico. Here are the quotes we got from State Farm:

Full comprehensive - $291 every 6 months
Liability - $168 every 6 months

Since the car is old, which one should we pick?
Typically I don't think older cars with limited market value need comprehensive coverage.

One rule of thumb I've heard is you don't need full coverage if your annual premiums are greater then 10% of the market value of your car less the deductible.
First what's the deductable? Second it's not what you paid for it, it's what would it appraise at at the time you have a claim. (Appraise at $5k - deductible $1k the most you get is $4k). So at each renewal period if the car is depreciating you would receive less if car is totaled. Third if you don't insure would a total loss be a significant financial burden to you? And last how often do you have a wreck or comp type damage.

My inclination would just be sure to have liability with one other caveat, if you have an umbrella liability policy it may require you to have full coverage on all cars, ask the agent.

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lthenderson
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Re: Full comprehensive or liability only?

Post by lthenderson » Mon Jun 19, 2017 2:00 pm

In most states, it is required to have liability. When I carry comprehensive, the deductible is $1k so I generally cancel it when the assessed value of my vehicle is between $5k-10k. I have multiple vehicles so having one car disappear from my lineup isn't devastating to my lifestyle or finances. I do try to keep comprehensive insurance on one vehicle because I do rent cars from time to time and to be insured, I have to have comprehensive on at least one vehicle.

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David Jay
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Re: Full comprehensive or liability only?

Post by David Jay » Mon Jun 19, 2017 5:14 pm

I drop comprehensive when my vehicles depreciate to about 3000-4000. I just dropped it on my 2008 Grand Prix with 135,000 miles.
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JDCarpenter
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Re: Full comprehensive or liability only?

Post by JDCarpenter » Mon Jun 19, 2017 5:16 pm

If I can easily replace the car out of cash flow, we go liability only. Drove the last new/cheap one off the lot with that.

E.T.A.--lthenderson has a good point though, which we will consider when we start to travel more and rent more vehicles.
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Jack FFR1846
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Re: Full comprehensive or liability only?

Post by Jack FFR1846 » Mon Jun 19, 2017 5:23 pm

I look at risk. Windshields are expensive to replace. Comp with full glass/no deductible is a must, in my opinion. My wife is a horrible driver, so I do expect she'll hit something. I also have a 20 year old son. I keep full coverage with $1k deductible on all our cars. Comp and collision cost less as the cars get older too, you know.
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sport
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Re: Full comprehensive or liability only?

Post by sport » Mon Jun 19, 2017 5:46 pm

Insurance rules are different by state. However, in my state, liability, collision, and comprehensive, are three different coverages. Collision covers damage to your car. Comprehensive is for fire, theft, malicious damage, windshield damage, running into an animal, etc. You can have comprehensive w/o collision (its not too expensive) or collision w/o comprehensive. Many people do not carry collision insurance on an older car because it is expensive. Comprehensive coverage is often maintained.

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gasdoc
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Re: Full comprehensive or liability only?

Post by gasdoc » Mon Jun 19, 2017 6:19 pm

We carry only liability on all of our cars- ranging from value of $10K to max of $33K. I like dealing with the body shop on my own without the insurance company asa middle man.

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sco
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Re: Full comprehensive or liability only?

Post by sco » Tue Jun 20, 2017 12:09 am

Jack FFR1846 wrote:I look at risk. Windshields are expensive to replace.

I disagree, I had a front windshield of a SUV replaced for $350 the same day, in my driveway.. Good install, no issues.. And no, I didn't do it myself. It took about 45 minutes beginning to end..

You do need to shop it around, 20 minutes well spent.

Thesaints
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Re: Full comprehensive or liability only?

Post by Thesaints » Tue Jun 20, 2017 4:07 am

The general rule is to never insure any loss you can take without distress.
If the car was purchesd for a few thousands bucks, is such a loss something which would cause financial hardship to you ?

Vanguard Fan 1367
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Re: Full comprehensive or liability only?

Post by Vanguard Fan 1367 » Tue Jun 20, 2017 6:27 am

Thanks to Vanguard and Boglehead help with investing I can self insure a car at the level that you list. I would go with liability only. I have had some issues with making claims so I wouldn't want to make a claim anyway with the comprehensive so why should I buy it.

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jeffyscott
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Re: Full comprehensive or liability only?

Post by jeffyscott » Tue Jun 20, 2017 8:34 am

flamesabers wrote:Typically I don't think older cars with limited market value need comprehensive coverage.

One rule of thumb I've heard is you don't need full coverage if your annual premiums are greater then 10% of the market value of your car less the deductible.
But in any case, that must be an insurance agent invented rule, it would result in almost never dropping the coverage for many drivers in many markets. The "rule' would have me keeping coverage on cars that are worth about $3000, or maybe even less if I chose a smaller deductible.

In this case, the collision and comp is $123 x 2 = $246 per year. So assuming that's maybe $500 deductible applying that "rule" here would mean paying for this coverage on a $3000 car.

I certainly would and do drop this coverage long before it becomes 10% of the maximum potential claim. I do so at more like 5%, since I drop at about $5000 or so, though I never thought of it that way.
press on, regardless - John C. Bogle

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jeffyscott
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Re: Full comprehensive or liability only?

Post by jeffyscott » Tue Jun 20, 2017 8:38 am

Afull wrote: My inclination would just be sure to have liability with one other caveat, if you have an umbrella liability policy it may require you to have full coverage on all cars, ask the agent.
Why would an umbrella, which is liability coverage, require collision and comprehensive coverage? I have never heard of this and it makes no sense. What company has this requirement?

Umbrella would usually require some level of liability coverage, mine requires that I carry $250,000/500,000 liability on cars. A previous policy we had required $100K/300K.
press on, regardless - John C. Bogle

Afull
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Re: Full comprehensive or liability only?

Post by Afull » Tue Jun 20, 2017 9:41 am

jeffyscott wrote:
Afull wrote: My inclination would just be sure to have liability with one other caveat, if you have an umbrella liability policy it may require you to have full coverage on all cars, ask the agent.
Why would an umbrella, which is liability coverage, require collision and comprehensive coverage? I have never heard of this and it makes no sense. What company has this requirement?

Umbrella would usually require some level of liability coverage, mine requires that I carry $250,000/500,000 liability on cars. A previous policy we had required $100K/300K.
I guess you missed the last 3 words of my post...I'm not an ins agent. Varies with ins co.

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jeffyscott
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Re: Full comprehensive or liability only?

Post by jeffyscott » Tue Jun 20, 2017 10:23 am

No I read those words, but I am curious to know where the idea for the words "if you have an umbrella liability policy it may require you to have full coverage on all cars" comes from?

Do you have some basis for stating that some insurance companies will require collision and comprehensive coverage on cars in order for an umbrella to be in effect?
press on, regardless - John C. Bogle

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F150HD
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Re: Full comprehensive or liability only?

Post by F150HD » Tue Jun 20, 2017 11:03 am

silverskates wrote:We just bought a used vehicle. It's a 2008, 32k miles, the body and inside are great but there are a few minor issues. We paid $5,000.

We currently use State Farm but are looking to switch to Geico. Here are the quotes we got from State Farm:

Full comprehensive - $291 every 6 months
Liability - $168 every 6 months

Since the car is old, which one should we pick?
Maybe I'm missing something here.

If you don't carry liability and you hit a father of 5 and kill him (and he is say a highly paid surgeon), would you be paying for "that" out of pocket?


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jeffyscott
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Re: Full comprehensive or liability only?

Post by jeffyscott » Tue Jun 20, 2017 1:50 pm

F150HD wrote:
silverskates wrote:We just bought a used vehicle. It's a 2008, 32k miles, the body and inside are great but there are a few minor issues. We paid $5,000.

We currently use State Farm but are looking to switch to Geico. Here are the quotes we got from State Farm:

Full comprehensive - $291 every 6 months
Liability - $168 every 6 months

Since the car is old, which one should we pick?
Maybe I'm missing something here.

If you don't carry liability and you hit a father of 5 and kill him (and he is say a highly paid surgeon), would you be paying for "that" out of pocket?
I think you are missing that by "full comprehensive" the OP means coverage that includes liability plus collision/comprehensive. My reading is $168 is the cost with liability only and the cost increases by $123 if collision/comp is added.
press on, regardless - John C. Bogle

Jewel
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Re: Full comprehensive or liability only?

Post by Jewel » Tue Jun 20, 2017 3:39 pm

I pondered this same question several years ago when I lost my job. At the 12 month mark of unemployment, I decided to save some money and let go of my comprehensive coverage (cc) on my 10 year old Honda Accord. Before doing so, however, I contacted my insurance agent to get his opinion if it was a good idea. He didn’t see anything wrong with dropping the coverage so I did. A few months after I got a job, at the 20th month mark, reinstating my cc was on my list of things to do. Unfortunately, before I got around to it, I was involved in a multi-car accident. I was stopped at a red light on my way home from work when a person, who fell asleep at the wheel, (ASATW) rear-ended the person behind me, and that person hit me. It was quite an impact and it totaled my car. I had some injuries but nothing life threatening.

When it came time to handle the insurance aspect of the accident I was in for quite a surprise when the ASATW insurance company wouldn’t release any funds to me for a rental car, medical expenses, or a replacement car. Why? ASATW wouldn’t give a statement about the accident and actually had 60 days to do so. Since I didn’t have comprehensive coverage, I had no representation with my insurance company so they had no obligation to help me or advance the funds while they waited to get paid from the ASATW insurance company. So I had to pay everything up front, even the ambulance service, without knowing what kind of coverage ASATW had or if I would ever get paid. Lesson learned; comprehensive coverage is about representation, not about how old the vehicle is.

I called my insurance agent afterwards and asked him if he knew about the 60 day waiting period and he said he did but he didn’t know of anyone who hadn’t given a statement before and it never occurred to him to tell me. (This happened in California. I don’t know if this is the same in other states.)

While this was a difficult experience to go through, it’s been quite a learning experience and I now know what it really means not to have comprehensive coverage. Also, I was fortunate because I had the funds available to pay for everything, including a new car. I was a boglehead even though I didn’t know I was a boglehead at the time. I only found this website about a year ago. I have learned a lot from all of you and I hope this post with be as helpful to you as all of your posts have been to me.

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LadyGeek
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Re: Full comprehensive or liability only?

Post by LadyGeek » Tue Jun 20, 2017 3:58 pm

Jewel, Welcome!

Let me give a different perspective: A few years ago, my Mom had an at-fault accident and there were some injuries (all OK now). To make a long story short, several lawsuits were filed against her.

The job of the insurance company is to defend you, regardless of fault. There are no legal fees, as your premium covers the cost. Everything was given to the insurance company's attorneys who deal with this stuff on a daily basis. I helped her work through the process.

The lawsuits were eventually settled after some negotiation. Where did the money to pay for the lawsuits come from? My Mom's liability coverage.

The dollar amount paid was more than several times the value of the car. It was fully covered under liability.
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

silverskates
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Re: Full comprehensive or liability only?

Post by silverskates » Tue Jun 20, 2017 4:05 pm

jeffyscott wrote:
F150HD wrote:
silverskates wrote:We just bought a used vehicle. It's a 2008, 32k miles, the body and inside are great but there are a few minor issues. We paid $5,000.

We currently use State Farm but are looking to switch to Geico. Here are the quotes we got from State Farm:

Full comprehensive - $291 every 6 months
Liability - $168 every 6 months

Since the car is old, which one should we pick?
Maybe I'm missing something here.

If you don't carry liability and you hit a father of 5 and kill him (and he is say a highly paid surgeon), would you be paying for "that" out of pocket?
I think you are missing that by "full comprehensive" the OP means coverage that includes liability plus collision/comprehensive. My reading is $168 is the cost with liability only and the cost increases by $123 if collision/comp is added.
Yes, you are correct. The $168 is for liability only and the cost goes up $123 if we add collision and comp.

Thank you all for responding to my post. We've decided to go with liability only.

sport
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Re: Full comprehensive or liability only?

Post by sport » Tue Jun 20, 2017 5:02 pm

How much is it if you keep comp and drop just collision?

Jewel
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Re: Full comprehensive or liability only?

Post by Jewel » Wed Jun 21, 2017 11:02 am

Thank you, LadyGeek. It feels good to be part of the forum. I appreciate all of your posts.

You are right it is the job of the insurance company to defend you but only if you have comprehensive coverage, at least in California. Since I cancelled that coverage, I was no longer paying my insurance company to defend me in an accident and that’s why they didn’t assist me with any recovery. Essentially, if you don’t have comprehensive coverage, you are taking on your own defense if you are in an accident. Most people don’t know that, I didn’t, and that’s why I thought it was so important to contribute to this post. Eventually, after ASATW gave her statement 45 days later, her insurance company paid and it was paid out of the liability part of her coverage. In hindsight, I was being penny wise but ended up being pound foolish for cancelling that coverage. Paying a few hundred bucks for comprehensive coverage was nothing in comparison to what I had to go through without representation.

Jewel

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jeffyscott
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Re: Full comprehensive or liability only?

Post by jeffyscott » Wed Jun 21, 2017 12:26 pm

If you have liability coverage only, then your insurance company will represent you if there is a claim against you, as they would have to pay the claim.

Maybe things are different in "no fault" states, but if I have a claim against the other driver's company and have collision coverage and medical payments those would cover things until I could collect from the other company. But if I have health insurance and money, I have no need for that sort of temporary smoothing of cash flow...it's certainly not worth the extra $200 or so per car per year to me.
press on, regardless - John C. Bogle

Jewel
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Re: Full comprehensive or liability only?

Post by Jewel » Wed Jun 21, 2017 1:22 pm

Yes, that's correct. If there is a claim against me and I only have liability insurance, my insurance company will take care of it.

Rupert
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Re: Full comprehensive or liability only?

Post by Rupert » Wed Jun 21, 2017 1:44 pm

Jewel wrote:Thank you, LadyGeek. It feels good to be part of the forum. I appreciate all of your posts.

You are right it is the job of the insurance company to defend you but only if you have comprehensive coverage, at least in California. Since I cancelled that coverage, I was no longer paying my insurance company to defend me in an accident and that’s why they didn’t assist me with any recovery. Essentially, if you don’t have comprehensive coverage, you are taking on your own defense if you are in an accident. Most people don’t know that, I didn’t, and that’s why I thought it was so important to contribute to this post. Eventually, after ASATW gave her statement 45 days later, her insurance company paid and it was paid out of the liability part of her coverage. In hindsight, I was being penny wise but ended up being pound foolish for cancelling that coverage. Paying a few hundred bucks for comprehensive coverage was nothing in comparison to what I had to go through without representation.

Jewel
The insurance company will defend you under your liability policy if you caused the accident. However, if you did not cause the accident, your insurance company will not pursue the at-fault driver for you via subrogation if you don't have collision/comprehensive coverage. In order to invoke the subrogration provisions of your insurance policy, you have to first file a claim on your collision/comprehensive policy. If you don't have a collision/comprehensive policy, then you can't do that. Without subrogation, you have to negotiate with the at-fault driver's insurance company yourself and wait for their liability policy to pay out, which can take months.

Jewel
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Re: Full comprehensive or liability only?

Post by Jewel » Wed Jun 21, 2017 4:51 pm

Thank you, Rupert. You explained it better than I did. That is what I had to do and it took about 5 months for them to pay.
Jewel

SpaethCo
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Re: Full comprehensive or liability only?

Post by SpaethCo » Wed Jun 21, 2017 9:06 pm

One other thing to consider about keeping collision coverage on a car where it might not seem to make financial sense: how willing are you going to be to handle all of the logistics after you're in an accident?

If you're in an accident that totals a vehicle, without collision coverage you have to sort out making sure the responding tow company gets paid, the holding yard gets paid (for however long your disabled car sits there), you have to arrange for a salvage yard to take the car, arrange for transportation from the holding yard to your chosen salvage yard, and deal with getting the title salvaged with the state.

If you have collision coverage, you call the insurance company and hand over your title to a claims agent -- they deal with the mess of what happens to the car from that point on. You get to move on with your life immediately. Personally I feel this is worth it even if my vehicle is valued at the deductible and I don't get a single penny from the insurance company.

You're not just insuring against the loss of the vehicle, you're also insuring against the time suck that is the logistics of dealing with your car after a wreck.

DL1111
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Re: Full comprehensive or liability only?

Post by DL1111 » Wed Jun 21, 2017 9:27 pm

I have removed collision but kept comp on my wife's 05 Camry, because it's still worth around $5k kbb. My 05 trailblazer is worth about $3k on kbb so it's strictly liability only. $5k is about the cutoff for my family but it might be different for you. I also service and maintain all of my vehicles myself so I assume they will last 200k miles. The $200-$300 extra I pay per year for a $2k payout to "replace" my car isn't a good trade off.

Think about it like this. If you didn't have a car today, would it be a burden for you to go out and buy that same car tomorrow? If not, I would go liability only.

Jewel
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Re: Full comprehensive or liability only?

Post by Jewel » Mon Jun 26, 2017 3:03 pm

It is a time suck and you bring up a very good point, SpaethCo, about the logistics of handling the vehicle after a wreck without comprehensive coverage. One thing that helped in my case was that my employer has a very large parking structure and they let me park my totaled car there until the insurance company towed it away. Also, get this. I had the same insurance company as the person who caused the accident and I thought for sure that would make a difference and that they would at least give me some direction or educate me a little bit on how to handle everything. Wrong! “But I’m a customer of yours,” I said. “Sorry, ma’am, but we can’t help you because you didn’t pay the premium for representation (cc coverage).” I’m laughing now at how naïve I was, but it wasn’t funny at the time.
Jewel

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