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When do I stop paying for collision and comprehensive insurance coverage?
Old 01-25-2014, 11:39 PM   #1
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When do I stop paying for collision and comprehensive insurance coverage?

I am trying to figure out how to determine when it is no longer valuable to pay for collision and comprehensive auto insurance coverage. I have 2007 Honda Accord. I live in NJ. I have enough in savings that I could self insure for a loss up to say 5,000. My total car insurance premium for the year is about 1,125. The comprehensive costs 65 and the collision costs 323. The deductible is 500. The car value is currently between 7,000 and 9,000.

At what point should I drop the comprehensive and collision insurance?
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Old 01-26-2014, 12:46 AM   #2
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I feel you are at that right decision point. A small change would be to increase your deductible to the max upper limit, usually $1000. The bigger change would be drop comp and collision and just pay liability of course. If your car becomes totaled, you will be able to find a decent used car still for $5G or more if you wish to add more cash.
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Old 01-26-2014, 10:16 AM   #3
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I'm dealing with the same decision, however an umbrella policy may be a roadblock to dropping coverage I really don't need. I recently traded my 2008 Tundra and 2005 highlander on a 2008 Lexus and a 2002 Ford Ranger. When I replaced the Tundra with the Ranger, my 6 month premium went down by 5 bucks. I called the insurance company (USAA) and didn't really like the answer I received. (What I really didn't like is the lack of knowledge of the individual I talked to about insurance coverage in general and willingness to go the extra step (look up the answer in this case) that USAA reps used to do without prompting). I plan on calling both USAA and their associated company that I have the umbrella policy with next week to figure out exactly what coverage I can delete within the minimum requirements for the umbrella coverage.
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Old 01-26-2014, 10:24 AM   #4
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oh wow, i have an umbrella policy and a homeowner policy with the same insurer for the auto policy. i did not even consider that the umbrella policy might limit whether i can even forego the collision and comprehensive insurance coverage. Thanks.

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Originally Posted by jimnjana View Post
I'm dealing with the same decision, however an umbrella policy may be a roadblock to dropping coverage I really don't need. I recently traded my 2008 Tundra and 2005 highlander on a 2008 Lexus and a 2002 Ford Ranger. When I replaced the Tundra with the Ranger, my 6 month premium went down by 5 bucks. I called the insurance company (USAA) and didn't really like the answer I received. (What I really didn't like is the lack of knowledge of the individual I talked to about insurance coverage in general and willingness to go the extra step (look up the answer in this case) that USAA reps used to do without prompting). I plan on calling both USAA and their associated company that I have the umbrella policy with next week to figure out exactly what coverage I can delete within the minimum requirements for the umbrella coverage.
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Old 01-26-2014, 11:16 AM   #5
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oh wow, i have an umbrella policy and a homeowner policy with the same insurer for the auto policy. i did not even consider that the umbrella policy might limit whether i can even forego the collision and comprehensive insurance coverage. Thanks.
I have an umbrella and no collision/comprehensive on my auto policy. As far as I know umbrellas work only on the liability side. But I did have to buy renter's insurance just to get that umbrella even though the value of everything in my apartment is less than the deductible. I guess it's the liability part that matters.

My cars I always bought used for about 6K and I've never had collision/comprehensive. I've had only one accident where it could have made a difference, but that car was at its end of life anyway.
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Old 01-26-2014, 11:19 AM   #6
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Nico, keep in mind that you can drop Collision but keep Comprehensive if you want. As you can see, Comp is much cheaper than Collision. Comp will protect you against what are usually total losses such as fire, theft, and wind/water. But it will also protect you against high-frequency, low-severity claims such as window glass (and I suggest you buy full-coverage glass so that coverage is worthwhile).

I have a 2007 Corolla and I am nearing a similar decision point as you are (my premiums for those coverages are about the same as yours).
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Old 01-26-2014, 11:53 AM   #7
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Basically, all insurance is paying for risk to cover major losses you cannot afford to cover yourself. If you feel you could (relatively) easily replace a totaled car from your savings, then drop the collision/comp & put what you save on premiums into a fund towards your next car.

Jimnjana- My guess is your small drop in total premium going from 08 Tundra to much lower-valued 02 Ranger could have been due to large INcrease in medical payments coverage. A few yrs ago I traded in a 9yr old mid-sized sedan for a new Altima was shocked to see my overall premiums (same coverage) went DOWN slightly. Obviously collision/comp went up with much newer, more valuable car, but there was a larger drop in medical coverage premium (prob due to added safety features in newer Altima like side curtain airbags, stability control, better structural design, etc.).
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Old 01-26-2014, 02:00 PM   #8
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I've posted this before, but here in Michigan with no fault insurance, if some jackass smashes into you and you have no collision coverage on your own car, you only collect a maximum of $500. YMMV.
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Old 01-26-2014, 02:03 PM   #9
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I've posted this before, but here in Michigan with no fault insurance, if some jackass smashes into you and you have no collision coverage on your own car, you only collect a maximum of $500. YMMV.
Good point. Every State has there own requirements so good to check potential pitfalls with Insurer and non-insurance advocates.
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Old 01-26-2014, 03:18 PM   #10
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I've posted this before, but here in Michigan with no fault insurance, if some jackass smashes into you and you have no collision coverage on your own car, you only collect a maximum of $500. YMMV.
Something similar happened to us here in MD except the maximum is $0. Though not technically a "no-fault" state, there is a liability standard and the road was icy, so the other car was not liable and we could not collect anything for a total loss.
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Old 01-26-2014, 03:24 PM   #11
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I usually drop my collision coverage at about year 4-5, but retain comprehensive for several years more.
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Old 01-26-2014, 03:30 PM   #12
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Here's a write up on the topic:

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Consumer Reports recommends this guideline: If the annual auto insurance premiums for comprehensive and collision are 10 percent or more of the book value of the car, consider dropping the coverage. In other words, if your car is worth $5,000 and your comprehensive and collision premiums cost more than $500 a year, it might be time to cut your auto insurance costs by canceling the coverage
https://www.lendingtree.com/auto-ins...ensive-article

I got a pretty new car (2012), so have collision and comp. But I upped the deductible to $2500.
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Old 01-26-2014, 03:58 PM   #13
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Basically, all insurance is paying for risk to cover major losses you cannot afford to cover yourself. If you feel you could (relatively) easily replace a totaled car from your savings, then drop the collision/comp & put what you save on premiums into a fund towards your next car.
+1. We just dropped comp & collision on our 08 Forester. We have $$ saved for our next vehicle and figured we were just burning cash.
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Old 01-26-2014, 05:02 PM   #14
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If your state is one which allows Uninsured Motorists Property Damage (UMPD) to be sold, and your company sells it, I would suggest you buy that coverage if you decide to drop Collision. UMPD, a rather obscure but fairly inexpensive coverage, will offer you some protection on your car in case the other driver has no insurance (or you are the victim of a hit-&-run accident).
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Old 01-26-2014, 05:51 PM   #15
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I had full coverage on a 2000 Dodge Intrepid right up until the end, when it was 10 years old and had 150,000 miles on it, and someone pulled a hit and run on it and totaled it in a parking lot. I only got $2,000 for it, but the full collision and comprehensive combined only added about $150 per year, I think. So, in my opinion at least, it was worth it.

In my case though, Maryland's Uninsured Motorist Fund, which they make everybody pay for, might have kicked in here. Sometimes they put hit-and-runs into that category. At least, they did years before, when I was run off the road and into a traffic light pole.

I replaced the Intrepid with a 2000 Park Avenue, which my guess might be worth around $2-3K at this point. It was low mileage and pretty nice when I bought it, but it seems like the last four years have taken a toll on it. I still keep full coverage on it though because, like with the old 'Trep, it only adds about $150 per year to the policy.
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Old 01-26-2014, 06:10 PM   #16
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One detail I just forgot about in my above situation, though...I have a $500 deductible on the collision portion of my insurance. So if I had been in an at-fault accident, I would've only gotten $1500 for that $2000 car.

Now that I think about it, I believe it was the Uninsured Motorist part of the insurance that paid out for that Intrepid. So, I guess that full coverage was kinda useless in that situation, after all. Still, it gave me peace of mind.
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Old 01-26-2014, 07:00 PM   #17
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Originally Posted by ERhoosier View Post
Basically, all insurance is paying for risk to cover major losses you cannot afford to cover yourself. If you feel you could (relatively) easily replace a totaled car from your savings, then drop the collision/comp & put what you save on premiums into a fund towards your next car.
+1. If you can buy a replacement vehicle (not necessarily a new one), then from a strict dollars-and-cents perspective you are wasting money when you pay for this insurance. The insurance company knows the chances that they'll have to pay out, knows what they will pay out if they "lose," knows all their costs, then adds a suitable profit and charges you the appropriate premium with all the costs baked into it. The only way you can "win" is to refuse to play.
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Old 01-26-2014, 09:09 PM   #18
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If you rent cars you might consider keeping it (this is almost an exclusive reason I keep mine).
With my State Farm auto policy, comprehensive & collision also covers the rental vehicle.
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Old 01-28-2014, 11:36 AM   #19
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If you rent cars you might consider keeping it (this is almost an exclusive reason I keep mine).
With my State Farm auto policy, comprehensive & collision also covers the rental vehicle.
Exactly my reasoning, since I rent cars a few times a year. I used to drop the comp and collision on my older vehicles until I realized that my insurance wouldn't cover rental damage if they were dropped. And the issue with umbrella policies is interesting - I hadn't considered that, given I haven't been dropping the coverages, but I know that I need to carry the maximum coverage levels on auto and home in order to add on the umbrella coverage.
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Old 01-28-2014, 12:52 PM   #20
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If you rent cars you might consider keeping it (this is almost an exclusive reason I keep mine). With my State Farm auto policy, comprehensive & collision also covers the rental vehicle.
Most credit cards (or at least mine all do) will provide you the car rental insurance free of charge provided you use that card and decline the renting agency's coverage.
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