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How long do you keep full insurance coverage on your auto
Old 10-22-2010, 08:47 PM   #1
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How long do you keep full insurance coverage on your auto

Just wondering..The Mrs. has an 05 Corolla and I'm not sure if it's time to trim back coverage. What are your thoughts?
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Old 10-22-2010, 09:02 PM   #2
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When I can absorb the replacement value comfortably. Right now it is about $15,000 on our car. While I could take that hit, I am not ready to self insure yet. It cost me about $700 a year for insurance, and will most likely get rid of the car before I reach a point that I would cancel the insurance.
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Old 10-22-2010, 09:09 PM   #3
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Originally Posted by keegs View Post
Just wondering..The Mrs. has an 05 Corolla and I'm not sure if it's time to trim back coverage. What are your thoughts?
Rule for all insurance: Keep it only as long as you can't afford to pay out of your own pocket. Using your example, if you have money to replace an 05 Corolla (or buy another one on credit), then get rid of the comprehensive insurance. All insurance is very expensive. Get rid of any insurance that you possibly can - as quickly as you can.

For example, most of my life I carried only major medical insurance w/ $10,000 deductible. If I got deadly sick, I had insurance. But I can pay for my own trips to the doctors and minor operations out of my own pocket.

Why pay an insurance company when you can be "self-insured"? That's not smart money.
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Old 10-22-2010, 09:52 PM   #4
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Originally Posted by keegs View Post
Just wondering..The Mrs. has an 05 Corolla and I'm not sure if it's time to trim back coverage. What are your thoughts?
The first step is usually to make sure the insurance company has all the right data on the car and the driver. Things get overlooked, like employment/retirement status, whether the car is driven for work/pleasure, and whether it's driven by any newly-licensed teens.

Second step is to see how much you'd save in raising deductibles to be able to build up a "self-insurance" fund. Raising the deductible by $1000 doesn't make much sense if the premium only goes down by $10. But if the premium drops by $250/year then you're only four years away from saving enough to handle it on your own, and after that you're "free".

The insurance company is only going to pay you actual cash value, minus your deductible. (You can get an approximation of ACV from Kelly Blue Book or Edmund's websites.) Assuming you're willing to self-insure, one thumbrule is that you should cancel comprehensive & collision when the vehicle is five years old. Another thumbrule is to cancel when the premium rises to 10% of the amount you're insuring. But those are just thumbrules.

When we were buying them used for under $10K we didn't bother with any insurance other than the minimum state requirements (and plenty of liability). Our Prius is only four years old but we decided not to bother with its comp/coll insurance either. We also carry UIM/UM in case our kid gets hit by someone and needs lifetime care as a result, but I'm probably going to cancel that when she graduates college and gets off the family payroll.
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Old 10-22-2010, 11:37 PM   #5
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In particular if one is retired be sure to remove the to work or school qualification on the auto insurance, It can make a 20 to 30% difference. (Because you will not be driving in rush hour every day)
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Old 10-23-2010, 12:39 AM   #6
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All good advice above. If you are going to beat the system, you MUST learn about insurance companies, income taxes, and how to make a variety of economic calculations,such as mortgage pay offs on Excel. Otherwise you will be the victim and never the winner!
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Old 10-23-2010, 12:19 PM   #7
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We carry high deductible for collision but $50 deduct on comprehensive. Since your window replacement is covered by comprehensive, we have always gotten a positive payoff. However, we live in an area with lots of heavy equipment on the roads and rocks are routinely airborne. I have yet to see a window replacment (especially with radio antenna) have an installed cost of less than $400 on our cars and usually much more.
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Old 10-23-2010, 01:11 PM   #8
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I dropped my collision coverage when my car hit ten years old and 95,000 miles . It did not drop the cost by a large amount so I'm not sure the savings were worth it .
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Old 10-23-2010, 02:08 PM   #9
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We have full coverage on our summer car but only pay for 6 months. There is $1000 deductible on the collision. On our winter car in Mexico, we have liability only and pay $247 for the year.
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Old 10-23-2010, 02:39 PM   #10
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I have heard seven years but that might be outdated since the average new car is $28,000.
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Old 10-23-2010, 02:42 PM   #11
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I have never had any more than the legal minimum liability insurance.
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Old 10-23-2010, 02:50 PM   #12
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Slightly OT but in many states personal auto insurance applies to rentals, so if you have adequate coverage you go without CDW on the rental.
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Old 10-23-2010, 03:36 PM   #13
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Well..I went through some of the numbers and the annual collision/comp premium is about 8% of the value of the vehicle. Used cars in good condition are currently fetching slightly more than KBB estimates so I'm probably not overdue for an adjustment yet but should keep an eye on it.

I'm going to have to make an inquiry as to whether the collision premium is adjusted to replacement value. I say that because my car, which is a 2010 Cobalt, has a much higher collision premium than my wife's 2005 Corolla. I've had no traffic violations in five years.

I should probably also consider shopping around since I've been with these guys for 37 years, but I'm pretty sure if I switch, my homeowners will go up. They got you BTBs...these guys.

While looking at the policy I also noticed that the Mrs. scored a tier two driver level for running a red light in Oct. 2006. Boy they're sharp.

Anyway...Thanks for all your thoughts and advice..
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Old 10-23-2010, 04:08 PM   #14
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I dropped my collision coverage when my car hit ten years old and 95,000 miles . It did not drop the cost by a large amount so I'm not sure the savings were worth it .
My car is 10 years old and the collision only cost me $9/month. I don't see any reason to drop it when my car is still worth 7k and I plan on driving it another 80k miles.
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Old 10-24-2010, 09:34 AM   #15
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I have never had any more than the legal minimum liability insurance.
Are you really willing to risk all your personal assets by carrying the minimum liability coverage?
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Old 10-24-2010, 10:54 AM   #16
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I dropped my collision coverage when my car hit ten years old and 95,000 miles . It did not drop the cost by a large amount so I'm not sure the savings were worth it .

This is what I have found.... the premium on the old cars drop a lot... so when it is very old.... it is cheap...

So, even if the car is worth $3K and I have a $1K deductible.... if it was totaled I would get $2K... the cost is maybe $40 to $60 per year...



NOW... I have been driving for over 35 years and have never used this coverage except for one windshield replacement... so I am way behind... but then again, I would much prefer to never use any of my insurance policies....
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Old 10-30-2010, 12:23 PM   #17
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If by "full coverage" you are refering the collision coverage, I generally keep a new car covered for about 4-5 years. After that the replacement value has generally reduced quite a bit and I can self insure myself against causing an accident. I have never collected on a collision claim in almost 50 years of driving an insured auto.
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Old 10-30-2010, 03:57 PM   #18
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'I dropped my collision coverage when my car hit ten years old and 95,000 miles . It did not drop the cost by a large amount so I'm not sure the savings were worth it . '

I had the same result when we requoted our car insurance - we just kept full coverage on the old car.
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Old 10-30-2010, 04:48 PM   #19
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I just dropped comp and collision on my 8YO subaru with 141k miles. Car is worth maybe 3 or 4k and I carry a 1k deductible. I love the car and plan to keep it for as long as I can feasibly keep it running (every time DW drives it I feel like someone else has been wearing my underwear), but financially it is at the stage of life where it is pretty much a disposable good. I would not notice a 3k fluctuation in the value of my portfolio, so that yardstick says I should not bother paying for the coverage. The van is worth 10k or better, so I will leave comp and collision on it for a few more years.

Heavy liability coverage is a must, though.
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Old 10-31-2010, 03:43 PM   #20
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Slightly OT but in many states personal auto insurance applies to rentals, so if you have adequate coverage you go without CDW on the rental.
Yes, in fact I just had to research this to be certain, as I dropped collision and comprehensive a couple of years ago on my 99 Honda, but will need to rent a minivan for about a week around Christmas.

Some other things I discovered: your personal auto insurance liability coverage applies to rental cars, and so does collision/comprehensive if you have it on your policy. If you don't (like me) you can either take the expensive rental car collision coverage, or use a credit card to provide collision coverage. I called Amex (the card I'm using) and they confirmed that although their coverage is normally secondary, if you have no collision/comprehensive through your insurance company it does become primary coverage, up to $50k.

Personally I think 2005 is still to early to drop collision/comprehensive. I would keep it on until the car is 8-10 years old and then drop it after that, as what the insurance will pay to repair a 10 year old car is not worth even the few extra dollars of insurance coverage, in my opinion.
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