Considering dropping collision coverage on 5 year old vehicles

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lemonPepper
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Considering dropping collision coverage on 5 year old vehicles

Post by lemonPepper »

I wanted to get some thoughts on our auto insurance situation (California). We are with AAA, we rate checked couple of times but they come out to be cheaper than other alternatives (maybe I haven't searched hard enough).

Total annual insurance cost is ~$3500. Collision is $486 for Leaf and $1181 for the Tesla. If we drop collision, we can save $1667, which is almost half of the premium. The current deductible is $1000

Our vehicles are now worth 9000 (Nissan Leaf) and 18,500 (Tesla Model 3). They are in great condition and we plan to keep them for many more years. Since the vehicle values are so much lower than when we purchased them, I'm considering dropping collision since it's the major proportion of the insurance cost.


Our Bodily injury/property damage limits are 1M/100k. Uninsured motorists coverage is 1M. I know we need to get an umbrella policy but I have procrastinated and plan to do it when changing the collision coverage.
Last edited by lemonPepper on Wed May 15, 2024 3:28 pm, edited 1 time in total.
Random Poster
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Random Poster »

Seems like a bad idea to me, but I also have full coverage on a 15 year old car that’s likely worth a lot less than your Leaf, so there’s that.
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260chrisb
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by 260chrisb »

Bad idea IMO. The question you have to answer and surely have considered is if you can or want to write a check for either car if you have an at fault accident?
bhtomj
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by bhtomj »

We have a 20 y/o Chevy Tahoe and.17 y/o Honda Odyssey which are worth much more to us than FMV. So we kept C&C but.max the deductible.
CletusCaddy
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by CletusCaddy »

A 2019 Model 3 is only worth $18.5k?

Doesn’t sound right to me.
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Watty
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Watty »

260chrisb wrote: Tue May 14, 2024 7:48 pm Bad idea IMO. The question you have to answer and surely have considered is if you can or want to write a check for either car if you have an at fault accident?
Even if you are not at fault you may not be able to collect from someone else that hits you.

Even if the driver is reasonable their insurance company may see that they are dealing with someone without an insurance company behind them and refuse to pay.
RetiredAL
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by RetiredAL »

I keep collision on one of my vehicles just so that I have coverage when I rent or I am driving someone else's car.
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whodidntante
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by whodidntante »

I'd drop it.
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Sandtrap
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Sandtrap »

lemonPepper wrote: Tue May 14, 2024 7:32 pm I wanted to get some thoughts on our auto insurance situation (California). We are with AAA, we rate checked couple of times but they come out to be cheaper than other alternatives (maybe I haven't searched hard enough).

Total annual insurance cost is ~$3500. Collision is $486 for Leaf and $1181 for the Tesla. If we drop collision, we can save $1667, which is almost half of the premium.

Our vehicles are now worth 9000 (Nissan Leaf) and 18,500 (Tesla Model 3). They are in great condition and we plan to keep them for many more years. Since the vehicle values are so much lower than when we purchased them, I'm considering dropping collision since it's the major proportion of the insurance cost.


Our Bodily injury/property damage limits are 1M/100k. Uninsured motorists coverage is 1M. I know we need to get an umbrella policy but I have procrastinated and plan to do it when changing the collision coverage.
If your testla gets into a "fender bender" collision and the cost to repair is 7000 would you wish that you kept collision insurance?

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Jack FFR1846
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Jack FFR1846 »

With a Tesla, the 2 problems are that Tesla will only supply parts to Tesla authorized body shops and these shops are typically backed up for months because Tesla bodies have many, many changes through a single model year. There are certainly skilled craftsmen who can fix the car not using replacement parts but by fixing crashed parts and fabricating anything that can't reasonably be fixed. But they're going to potentially be really expensive. So in short, any collision damage to a Tesla is wicked expensive. If your Leaf gets in a crash, I can buy parts. You can buy parts. Joe Blow can buy parts. A Tesla? Nope.

Should you keep paying those big bucks for collision? I can't help with that. My Jeep with higher limits than you have costs me $325 a year but any Joe can slap on a new body part that cost $38 to buy from Jeep or $12 from the junkyard.
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Topic Author
lemonPepper
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by lemonPepper »

CletusCaddy wrote: Tue May 14, 2024 7:54 pm A 2019 Model 3 is only worth $18.5k?

Doesn’t sound right to me.
considering you can buy new ones for around $40k, the market for used Teslas or EVs has dropped quite a bit.

I see some listed for 20 to 22k, I think the price I got was from carvana, so it may be on the low side. I don't think the private market value would be more than $22k, so yes, a bit higher than what I mentioned.

https://www.edmunds.com/tesla/model-3/2 ... ?radius=25
mariezzz
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by mariezzz »

If you were talking about something like a Honda civic, maybe you could self-insure. I did on a 7 year old internal combustion engine Toyota Corolla I bought used & drove for 11 years. I haven't owned a newer car than it ever, so have never carried comprehensive & collision (current car is 24 years old).

In part, it depends on how you drive, but also how people around you drive, & also cost to repair.

EVs cost a lot more to repair and take longer to repair; that's probably why you're paying so much for C&C. I probably wouldn't self-insure on your EVs, but if you can afford to pay for your car's damage if there's an accident, you could gamble a bit.

CA has a lot of uninsured drivers.
Admiral
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Admiral »

What do your finances look like? Do you have $2m in cash, or nothing? If a $5k repair is a drop in the bucket for you, then the insurance is not worth it. If it represents a significant (or at least annoying) outlay, then I'd keep it.

I could easily pay $10k to repair my 2019 car, but it would require selling stock. I don't want to do that, so I keep the collision insurance. You can always get a higher deductible to save a little cash. Or shop around.
Onlineid3089
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Onlineid3089 »

bhtomj wrote: Tue May 14, 2024 7:50 pm We have a 20 y/o Chevy Tahoe and.17 y/o Honda Odyssey which are worth much more to us than FMV. So we kept C&C but.max the deductible.
How much is a max deductible? Seems like the difference between whatever a max deductible and what you'd get for a totaled 17 year old Odyssey would be relatively small. Say a $2000 deductible and a $6000 FMV* so you'd stand to gain $4000 by keeping the collision coverage?

*The 6000 came from KBB for a 2007 Odyssey with 150,000 miles in 94305 zip code (Stanford University per Google under the assumption things would be expensive there) with top trim, excellent condition, and private party to skew value up and give a best case scenario. There just doesn't seem to be much upside on that, though maybe the collision coverage is $150 per year on that vehicle or something low like that.
soccerrules
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by soccerrules »

I'd keep the collision on 5 year old cars, but raise the deductible to $1000.

I have dropped collision on 10+ year old cars that were worth $5K or less.
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crisp3er
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by crisp3er »

soccerrules wrote: Wed May 15, 2024 7:58 am I'd keep the collision on 5 year old cars, but raise the deductible to $1000.

I have dropped collision on 10+ year old cars that were worth $5K or less.
Interesting points of view! Personally, I believe it's a rational approach to adjust the coverage level of insurance based on the age and value of the car. I'll take your advice into consideration and carefully analyze the available options to make the best decision regarding my car insurance.
soccerrules
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by soccerrules »

crisp3er wrote: Wed May 15, 2024 8:01 am
soccerrules wrote: Wed May 15, 2024 7:58 am I'd keep the collision on 5 year old cars, but raise the deductible to $1000.

I have dropped collision on 10+ year old cars that were worth $5K or less.
Interesting points of view! Personally, I believe it's a rational approach to adjust the coverage level of insurance based on the age and value of the car. I'll take your advice into consideration and carefully analyze the available options to make the best decision regarding my car insurance.
there are variables and personal choices --that's why it is Personal Finance. I did the same-- looked at a matrix of different deductible amounts, coverage limits where allowed to adjust and then the weighed the risk/lower cost of a number of options. As others have stated, sometimes it is smart to pay the extra $XX/mo for a certain level of coverage and peace of mind. The goal is never to use it. :happy
Don't let your outflow exceed your income or your upkeep will be your downfall.
andypanda
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by andypanda »

I just googled prices on 2018 Leafs and I found one for under $10k. Most of them were in the $11k to $17k range. I didn't spend more than 60 seconds looking.

I saw an article a couple of hours ago on Foxnews iirc that the used car market is heating up again. People are more willing to pay a higher price than they have been recently
sailaway
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by sailaway »

Watty wrote: Tue May 14, 2024 7:59 pm
260chrisb wrote: Tue May 14, 2024 7:48 pm Bad idea IMO. The question you have to answer and surely have considered is if you can or want to write a check for either car if you have an at fault accident?
Even if you are not at fault you may not be able to collect from someone else that hits you.

Even if the driver is reasonable their insurance company may see that they are dealing with someone without an insurance company behind them and refuse to pay.
Your insurance company will seek reimbursement from them. But there are still reasons they may not be liable, even if they are at fault. I was hit by someone due to their medical emergency last year and learned about this issue.
CloseEnough
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by CloseEnough »

Ironically, it depends somewhat on your overall financial status, and whether you could easily absorb the loss if you have to pay for a collision without the insurance. Ironic because if you have the financial status, then the savings is less important, but still a good reason to do it (don't pay for insurance you don't need). If you don't have the financial status, the savings is more important but it is a bet/gamble that might not pay off. I've struggled with the same, may now look at it again.
hicabob
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by hicabob »

I have not had collision coverage for 35 years or so including for new cars. I have never had to pay for crashing into someone/something in those 35 years either and have had no problem collecting from a couple fender benders that were others fault. So much money saved. If you have the financial wherewithal it seems obvious that a careful driver should self-insure. I do keep good liability insurance and have a large umbrella policy.
Last edited by hicabob on Wed May 15, 2024 10:36 am, edited 1 time in total.
EricGold
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by EricGold »

My collision insurance threshhold is usually somewhere in the $10k - $15k range

I did not have collision on our LEAF
I recently increased the collision deductible to $2k on our 2022 Bolt. It cost about $10 a month
I still have collision on our 2023 Tesla Model Y

Tesla body work can be outrageously expensive

As an aside, I have never found AAA to be competitive in my state of NM. Progressive won the last shopping round.
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Rob5TCP
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Rob5TCP »

RetiredAL wrote: Tue May 14, 2024 8:00 pm I keep collision on one of my vehicles just so that I have coverage when I rent or I am driving someone else's car.
+1
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lemonPepper
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by lemonPepper »

My deductible is $1000, but based on this discussion I decided to drop collision on Leaf (not a huge savings) but keep it on the Tesla due to the higher value. That also gives me the ability to have collision coverage when I rent cars (which I do every other month to go on a trip, these small low range EVs are not great for trips).
rkhusky
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by rkhusky »

9000/486 = 18.5.
18500/1181 = 15.7

Seems more cost effective to insure the Leaf. But at those values, I would continue to insure both, probably until the ratio gets down to 5 or the value drops below $5K or less than a typical collision expense.
JPM
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by JPM »

Not a Tesla owner myself but Illinois friends often seem to need a rental for several months while awaiting parts and repairs when their Teslas need work. A friend had his Tesla front wheel bumped in a parking lot around Thanksgiving while he and his DW were at dinner. It took 5+ months to accomplish the axle repair and he went over the $6000 max insurance rental allowance for the rental. No loaners. He loves the Tesla and won't drive anything else. Keep the insurance maximize the deductible.
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lemonPepper
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by lemonPepper »

rkhusky wrote: Wed May 15, 2024 12:37 pm 9000/486 = 18.5.
18500/1181 = 15.7

Seems more cost effective to insure the Leaf. But at those values, I would continue to insure both, probably until the ratio gets down to 5 or the value drops below $5K or less than a typical collision expense.
It's just that the Tesla collision would be more costly in absolute numbers and what people are reporting about costs of repairing Tesla. I have the EF and savings to take care of an accident to the leaf. I could cover the Tesla too but it will hurt.
kilkoyne
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by kilkoyne »

I would drop collision but this is coming from someone who hasn't had collision for over 30 years. If I totalled my new car now I could live with the loss; not everyone can.
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Lee_WSP
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by Lee_WSP »

Here’s how I look at it.

I can control the odds and scope of damage for an at fault collision, but I cannot control the odds of an uninsured or underinsured motorist hitting my vehicle and causing a ton of damage. As such, it’s the second I’m really insuring against.
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by doobiedoo »

I don't carry collision nor comprehensive insurance on my car.
I do pay for uninsured motorist coverage and liability. And I have $2M umbrella liability.

Essentially I self-insure for the loss of my vehicle if I am at fault.
I did this even with a brand-new $40k Honda Odyssey in 2015.

Insurance is about paying to avoid the low probability of a "large" loss.
Because the insurance industry wants and NEEDS to make money, you will always pay a premium over the probabilistic cost of the loss.

The "large loss" is subjective. If the cost to replace your car doesn't make a difference in your financial life, it's probably not worth insuring against such a loss. Also, insurance companies aggregate the probability of loss across their entire customer base. If you have a higher than average probability of a loss (e.g. bad driver, aggressive driver, live in areas with high auto theft, etc.), then maybe the insurance is worth the cost.

Daniel Kahneman [Nobel 2002 prize winner] covers this in his book "Thinking Fast and Slow" https://www.amazon.com/Thinking-Fast-Sl ... 0374533555

Here is Ameet Ranadive's summary of "The Possibility Effect: Why Lotteries and Insurance Exist".
Scroll down to the "Low probability loss (“insurance”)" subtitle.
https://medium.com/@ameet/the-possibili ... a636cf3bd6

See BH thread: "When to drop full coverage [Auto] insurance"
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mariezzz
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by mariezzz »

Rob5TCP wrote: Wed May 15, 2024 11:43 am
RetiredAL wrote: Tue May 14, 2024 8:00 pm I keep collision on one of my vehicles just so that I have coverage when I rent or I am driving someone else's car.
+1
Maybe it depends on the state, but I always have heard that the coverage the vehicle's owner has covers the vehicle. So it's smart to be careful about who you let drive your vehicle.

Also, factor in the time you'll spend dealing with your insurance company if your need to make a claim under C&C - plus the potential increased premium you'd pay as a result.
JoeJohnson
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by JoeJohnson »

doobiedoo wrote: Wed May 15, 2024 3:54 pm Also, insurance companies aggregate the probability of loss across their entire customer base. If you have a higher than average probability of a loss (e.g. bad driver, aggressive driver, live in areas with high auto theft, etc.), then maybe the insurance is worth the cost.
Insurers don't aggregate probability across their entire customer base. They aggregate across pools of similar risk profiles. Bad drivers, aggressive drivers, on average, would have a history of claims and thus different rates. Theft will be estimated by zip code.

p.s. self-insuring a brand-new $40k vehicle is likely penny wise, pound foolish. It does get harder to justify collision/comp with age as the vehicle depreciates. My general experience is collision/comp premiums don't go down w/ age. Brand new is most favorable premium:payout ratio.
TimeTheMarket
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by TimeTheMarket »

As a model 3 owner I feel I must point out that collision repairs on these are VERY VERY VERY expensive. I was quoted $10k to have a quarter panel replaced and repainted, and there was NO other damage beyond this panel (I read through the collision center's quote in detail).

This is why insurance on these is so insane to begin with.
CletusCaddy wrote: Tue May 14, 2024 7:54 pm A 2019 Model 3 is only worth $18.5k?

Doesn’t sound right to me.
Sounds right to me. EVs are disposable vehicles. I'm on my third. I only get them if I can get a hyper-aggressive lease price or, in the case of our model 3, $9500 thrown at me courtesy of tax breaks. They are ghastly, horrific, worse-than-bad holders of value. To be honest with you I'm surprised his 2019 is worth even that. Maybe it's not the base model. I paid $29k for a brand new model 3 last year after Tesla's price cuts and tax breaks--and at that time the base was covered by the $7500 federal. I got it because our Leaf was totaled.

I'm not hating. I bought my car with both eyes wide open.
Jack FFR1846 wrote: Tue May 14, 2024 8:37 pm With a Tesla, the 2 problems are that Tesla will only supply parts to Tesla authorized body shops and these shops are typically backed up for months because Tesla bodies have many, many changes through a single model year. There are certainly skilled craftsmen who can fix the car not using replacement parts but by fixing crashed parts and fabricating anything that can't reasonably be fixed. But they're going to potentially be really expensive. So in short, any collision damage to a Tesla is wicked expensive. If your Leaf gets in a crash, I can buy parts. You can buy parts. Joe Blow can buy parts. A Tesla? Nope.

Should you keep paying those big bucks for collision? I can't help with that. My Jeep with higher limits than you have costs me $325 a year but any Joe can slap on a new body part that cost $38 to buy from Jeep or $12 from the junkyard.
True, and moreover the vast majority of body shops will not even talk to you if you have a Tesla. I called a bunch looking for work on my aforementioned dent and they simply refused to even deal with me. I ended up learning dent removal myself as DIY and got it close to original for just my labor, because I refused to be a parcel to what that shop was asking.

It's best, if you're going to be in an accident with a tesla, to just hope that it's totaled because the collision process is very painful.

It's temping for a person not involved in an accident for a while to start thinking of ways to save money, but when my daughter totaled the Leaf hitting a deer we had insurance, with no complaints at all, give me a car for a few weeks while the collision shop dealt with it. The funny thing is I had just switched insurers a month or two earlier and had not initially done the mandatory NY inspection, so I was running with only liability until something like three weeks before the accident.
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dhally
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Re: Considering dropping collision coverage on 5 year old vehicles

Post by dhally »

For us, it depends on whether we have a backup vehicle, how much inconvenience/cost would be caused by having a vehicle out of service, and of course the cost to replace. I think there is a also a small discount if you keep collision on at least one vehicle. Our main car is a 2016 Forester. We have collision on it, but will consider dropping that in the next few years. Our second car is a 2009 Honda Fit. No collision on it since it is low value and don't really NEED it. Our RV has collision because we really like having it, but probably would not choose to pay for a replacement if it was totaled.
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