Dropping collision insurance on auto policy for older car?

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cdc
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Dropping collision insurance on auto policy for older car?

Post by cdc » Sun Jan 13, 2019 12:26 pm

Our college-aid daughter recently totaled our 2011 Honda Civic. The insurance company gave us $9,000. Our remaining vehicle is a 2004 Honda Odyssey with low miles (about 80,000) but lots of dings and scratches on the body. I’m guessing it’s worth, at most, $2,500. My question is whether I should drop the collision coverage on this vehicle. I pay $33/month with a $500 deductible.

badger42
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Re: Dropping collision insurance on auto policy for older car?

Post by badger42 » Sun Jan 13, 2019 12:29 pm

Asuming you can easily self insure, paying 400 bucks a year to insure a $2000 risk seems silly.

dknightd
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Re: Dropping collision insurance on auto policy for older car?

Post by dknightd » Sun Jan 13, 2019 12:38 pm

What will your daughter drive now? I drop collision and comprehensive when the cost is more than I'm likely to receive. It is a gamble. The house (insurance company) usually wins. But I like to be covered, just in case.

02nz
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Re: Dropping collision insurance on auto policy for older car?

Post by 02nz » Sun Jan 13, 2019 12:41 pm

badger42 wrote:
Sun Jan 13, 2019 12:29 pm
Asuming you can easily self insure, paying 400 bucks a year to insure a $2000 risk seems silly.
+1, and actually it's a $1500 risk after deductible. A no-brainer to keep just the liability insurance.

Jack FFR1846
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Re: Dropping collision insurance on auto policy for older car?

Post by Jack FFR1846 » Sun Jan 13, 2019 12:50 pm

Give it to daughter and buy yourself a new car. Keep it. When the daughter crashes the van, tell her she's no longer allowed to drive until she buys her own car and insures it on her own.
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Blake7
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Re: Dropping collision insurance on auto policy for older car?

Post by Blake7 » Sun Jan 13, 2019 1:02 pm

It sounds like your daughter is over 18, so it might be a good idea to put the vehicle registration in her name, if it isn't already, to reduce your liability exposure.

Cycle
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Re: Dropping collision insurance on auto policy for older car?

Post by Cycle » Sun Jan 13, 2019 1:11 pm

Self insure on collision. We never own a vehicle that is so expensive that we need to carry collision, so they're replaceable for less than 10k. For my wife's vehicle.
Last edited by Cycle on Sun Jan 13, 2019 1:14 pm, edited 2 times in total.
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RickBoglehead
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Re: Dropping collision insurance on auto policy for older car?

Post by RickBoglehead » Sun Jan 13, 2019 1:13 pm

Blake7 wrote:
Sun Jan 13, 2019 1:02 pm
It sounds like your daughter is over 18, so it might be a good idea to put the vehicle registration in her name, if it isn't already, to reduce your liability exposure.
Depending on whether the daughter lives in their home or not, or is on their policy or not, this may accomplish nothing.

We were told by our insurance company that until our son moved out of the house, having his own policy did nothing, at least from their perspective, to reducing risk, but it certainly would increase his costs.
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Re: Dropping collision insurance on auto policy for older car?

Post by Blake7 » Sun Jan 13, 2019 1:48 pm

RickBoglehead wrote:
Sun Jan 13, 2019 1:13 pm
Blake7 wrote:
Sun Jan 13, 2019 1:02 pm
It sounds like your daughter is over 18, so it might be a good idea to put the vehicle registration in her name, if it isn't already, to reduce your liability exposure.
Depending on whether the daughter lives in their home or not, or is on their policy or not, this may accomplish nothing.

We were told by our insurance company that until our son moved out of the house, having his own policy did nothing, at least from their perspective, to reducing risk, but it certainly would increase his costs.
Doesn't having the vehicle registered in her name transfer the liability beyond the policy coverage to her (with the assumption she has little or no assets to go after compared to the parents, which would be the case in most circumstances)? This is independent of where she lives or whether she has her own policy or not.

SpaethCo
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Re: Dropping collision insurance on auto policy for older car?

Post by SpaethCo » Sun Jan 13, 2019 1:55 pm

3 points that I haven’t seen made yet; one financial, and two intangible.

Financial:
1) Your loss potential is not just the value of the vehicle. It also includes towing and extraction charges following a wreck, plus any storage charges you rack up. Even if you carry AAA, that doesn’t help when it’s first responders who call for the tow and you get billed accident recovery rates.

Service:
2) If you don’t carry collision, you can’t subrogate a claim in an accident where you aren’t at fault. You have to deal with the other party’s insurance company yourself. At best, this elongates the process for a payout. At worst, the service from the other party’s insurance company will be substantially worse than your insurance provider.

3) If you carry collision and wreck the vehicle, you hand your title over to a claims agent and never have to worry about the car again. If you don’t, you’re responsible for the logistics of getting the car from wherever it was wrecked to its final destination, including all of the title paperwork. If you don’t stay on top of tracking this down, this can become a signficant financial consideration.

Admiral
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Re: Dropping collision insurance on auto policy for older car?

Post by Admiral » Sun Jan 13, 2019 2:17 pm

SpaethCo wrote:
Sun Jan 13, 2019 1:55 pm
3 points that I haven’t seen made yet; one financial, and two intangible.

Financial:
1) Your loss potential is not just the value of the vehicle. It also includes towing and extraction charges following a wreck, plus any storage charges you rack up. Even if you carry AAA, that doesn’t help when it’s first responders who call for the tow and you get billed accident recovery rates.

Service:
2) If you don’t carry collision, you can’t subrogate a claim in an accident where you aren’t at fault. You have to deal with the other party’s insurance company yourself. At best, this elongates the process for a payout. At worst, the service from the other party’s insurance company will be substantially worse than your insurance provider.

3) If you carry collision and wreck the vehicle, you hand your title over to a claims agent and never have to worry about the car again. If you don’t, you’re responsible for the logistics of getting the car from wherever it was wrecked to its final destination, including all of the title paperwork. If you don’t stay on top of tracking this down, this can become a signficant financial consideration.
All this is policy dependent and these fears are overblown. My SF policy includes emergency (or just general) towing, and I don't carry collision. So, if I'm in an accident they reimburse me (or pay the towing co directly, which has happened before.) If you want to fix the car and need it towed again, typically the shop who gets the work will pick up the towing bill. If not, then the salvage yard will. At worst you're out $150. I think towing coverage costs me $5 a year.

Cancel the collision. Don't forget that the insurance co will only pay to fix the car if the estimate is 80% or more of ACV. With a $1500 deductible, it will be totaled regardless of the severity of the accident (assuming your estimate of its worth is correct.) Just bank the money and pay to have the car fixed, if it's worth it to do so.

DrGoogle2017
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Re: Dropping collision insurance on auto policy for older car?

Post by DrGoogle2017 » Sun Jan 13, 2019 2:29 pm

I dropped collision on a Toyota Camry that would have cost $4000, my kid had a scam of a accident, people living near her school didn’t turn on the head light, collision, car was totaled. One of her sorority friends dad purchased our car for $1000 in cash, he owns a salvage company. I would drop it.

qiora
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Re: Dropping collision insurance on auto policy for older car?

Post by qiora » Sun Jan 13, 2019 2:59 pm

+1 more consideration on items 2 and 3.

I drove similar car to OP, worth under $2k, used for about 75mi of daily work commute. Around the time when I last renewed, I added collision (for additional $230/yr, $250 deductible) after seeing two co-workers recently dealing with aftermath of totoaling their cars. In both cases, coworkers were not at-fault, but did not carry collision. Both coworkers had to deal with the other parties' insurance themselves, eventually hire lawyers to take control of claim process.

I learnt that the decision of keeping vs dropping collision on old vehicles is a personal peace-of-mind type decision, rather than a financial one.
SpaethCo wrote:
Sun Jan 13, 2019 1:55 pm
3 points that I haven’t seen made yet; one financial, and two intangible.

Financial:
1) Your loss potential is not just the value of the vehicle. It also includes towing and extraction charges following a wreck, plus any storage charges you rack up. Even if you carry AAA, that doesn’t help when it’s first responders who call for the tow and you get billed accident recovery rates.

Service:
2) If you don’t carry collision, you can’t subrogate a claim in an accident where you aren’t at fault. You have to deal with the other party’s insurance company yourself. At best, this elongates the process for a payout. At worst, the service from the other party’s insurance company will be substantially worse than your insurance provider.

3) If you carry collision and wreck the vehicle, you hand your title over to a claims agent and never have to worry about the car again. If you don’t, you’re responsible for the logistics of getting the car from wherever it was wrecked to its final destination, including all of the title paperwork. If you don’t stay on top of tracking this down, this can become a signficant financial consideration.

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RickBoglehead
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Re: Dropping collision insurance on auto policy for older car?

Post by RickBoglehead » Sun Jan 13, 2019 3:17 pm

Blake7 wrote:
Sun Jan 13, 2019 1:48 pm
RickBoglehead wrote:
Sun Jan 13, 2019 1:13 pm
Blake7 wrote:
Sun Jan 13, 2019 1:02 pm
It sounds like your daughter is over 18, so it might be a good idea to put the vehicle registration in her name, if it isn't already, to reduce your liability exposure.
Depending on whether the daughter lives in their home or not, or is on their policy or not, this may accomplish nothing.

We were told by our insurance company that until our son moved out of the house, having his own policy did nothing, at least from their perspective, to reducing risk, but it certainly would increase his costs.
Doesn't having the vehicle registered in her name transfer the liability beyond the policy coverage to her (with the assumption she has little or no assets to go after compared to the parents, which would be the case in most circumstances)? This is independent of where she lives or whether she has her own policy or not.
No, that is not my understanding. My insurance company wouldn't lower my umbrella cost until my son moved out. And registration is irrelevant if you still insure the car.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

Good Listener
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Re: Dropping collision insurance on auto policy for older car?

Post by Good Listener » Sun Jan 13, 2019 3:20 pm

I would drop the collision. I would keep the comprehensive even if not worth it because if my car is stolen I want a partner to help me navigate the system.

Topic Author
cdc
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Re: Dropping collision insurance on auto policy for older car?

Post by cdc » Sun Jan 13, 2019 4:54 pm

Thanks for the responses, everyone. We’ll drop the collision coverage.

orlandoman
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Re: Dropping collision insurance on auto policy for older car?

Post by orlandoman » Sun Jan 13, 2019 5:43 pm

FYI, collision coverage on your personal vehicle will make it available in most cases should you rent a car & have an accident.
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High Technology
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Re: Dropping collision insurance on auto policy for older car?

Post by High Technology » Sun Jan 13, 2019 5:55 pm

Is a higher deductible available on that car? I usually max out the deductible on collision, because I can self insure up to higher amounts ($1,500 or $2,000) easily -- but still have the large risks insured. Like others, I do like the idea of my insurance company doing the legwork if there is an accident, as the other company may give you the runaround if you're also not their customer.

Insurance companies often (in my experience) price the collision in such a way that it's worth going up for me (e.g., save $200/year to move the deductible up from $500 to $1,000) -- that means there's a 40% probability ($200 for $500 of additional coverage) of an accident. There's a lower decrease in premium as you move up the line, so in the same example, it might only be an additional $125 savings for the next $500 increase in deductible to $1,500. The savings seem especially true when there are younger drivers on the policy.

On an older car like this, they may cap the deductible -- so YMMV.

jerryk68
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Re: Dropping collision insurance on auto policy for older car?

Post by jerryk68 » Sun Jan 13, 2019 6:21 pm

I rent cars occasionally and use my personal auto policy to cover collision and comprehensive. If you rent cars, I would check with your insurance company to see if you are covered without collusion on your personal car.

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Re: Dropping collision insurance on auto policy for older car?

Post by bubbadog » Sun Jan 13, 2019 6:27 pm

cdc wrote:
Sun Jan 13, 2019 12:26 pm
Our college-aid daughter recently totaled our 2011 Honda Civic. The insurance company gave us $9,000. Our remaining vehicle is a 2004 Honda Odyssey with low miles (about 80,000) but lots of dings and scratches on the body. I’m guessing it’s worth, at most, $2,500. My question is whether I should drop the collision coverage on this vehicle. I pay $33/month with a $500 deductible.
I would.

Paying $33/month for a max. of $2,000 (2,500-500) payout seems like a bad bet.

Do you have any other cars with full coverage?

Topic Author
cdc
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Re: Dropping collision insurance on auto policy for older car?

Post by cdc » Sun Jan 13, 2019 10:34 pm

bubbadog wrote:
Sun Jan 13, 2019 6:27 pm
cdc wrote:
Sun Jan 13, 2019 12:26 pm
Our college-aid daughter recently totaled our 2011 Honda Civic. The insurance company gave us $9,000. Our remaining vehicle is a 2004 Honda Odyssey with low miles (about 80,000) but lots of dings and scratches on the body. I’m guessing it’s worth, at most, $2,500. My question is whether I should drop the collision coverage on this vehicle. I pay $33/month with a $500 deductible.
I would.

Paying $33/month for a max. of $2,000 (2,500-500) payout seems like a bad bet.

Do you have any other cars with full coverage?
No, right now the Odyssey is now our only car, so I’ll need to ask whether dropping collision means we’re not covered when we rent a car.

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Re: Dropping collision insurance on auto policy for older car?

Post by bubbadog » Sun Jan 13, 2019 11:13 pm

cdc wrote:
Sun Jan 13, 2019 10:34 pm
bubbadog wrote:
Sun Jan 13, 2019 6:27 pm
cdc wrote:
Sun Jan 13, 2019 12:26 pm
Our college-aid daughter recently totaled our 2011 Honda Civic. The insurance company gave us $9,000. Our remaining vehicle is a 2004 Honda Odyssey with low miles (about 80,000) but lots of dings and scratches on the body. I’m guessing it’s worth, at most, $2,500. My question is whether I should drop the collision coverage on this vehicle. I pay $33/month with a $500 deductible.
I would.

Paying $33/month for a max. of $2,000 (2,500-500) payout seems like a bad bet.

Do you have any other cars with full coverage?
No, right now the Odyssey is now our only car, so I’ll need to ask whether dropping collision means we’re not covered when we rent a car.
I have Allstate auto insurance.

I was told by my agent that we would not have full coverage on a rental car if we do not have full coverage on one of our cars.

whomever
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Re: Dropping collision insurance on auto policy for older car?

Post by whomever » Mon Jan 14, 2019 9:20 am

In addition to rental coverage, if we borrow someone else's car our insurance covers that only if we have collision coverage on all our vehicles. Hopefully anyone who we borrowed an expensive vehicle from would have their own collision insurance, but it's something to keep in mind.

n.b. - that's our policy; yours may well be different.

lakpr
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Re: Dropping collision insurance on auto policy for older car?

Post by lakpr » Mon Jan 14, 2019 2:55 pm

Regarding collision coverage when renting cars, true that your primary insurance wouldn’t cover you if you don’t have it with your own car. But if you have a decent credit card (not the subprime ones), AND you don’t rent exotic cars or oversized vehicles like limos, the credit card coverage would cover you.

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Re: Dropping collision insurance on auto policy for older car?

Post by willthrill81 » Mon Jan 14, 2019 3:24 pm

cdc wrote:
Sun Jan 13, 2019 4:54 pm
Thanks for the responses, everyone. We’ll drop the collision coverage.
I would also urge you to drop comprehensive coverage for the same reason.

For a vehicle worth only a few thousand dollars, liability and perhaps uninsured motorist coverage are about all you need (unless your state requires more).
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Re: Dropping collision insurance on auto policy for older car?

Post by willthrill81 » Mon Jan 14, 2019 3:26 pm

lakpr wrote:
Mon Jan 14, 2019 2:55 pm
Regarding collision coverage when renting cars, true that your primary insurance wouldn’t cover you if you don’t have it with your own car.
Most insurers extend your collision coverage to rentals. Ours does (State Farm).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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