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Keeping collision on car insur
Old 02-12-2010, 06:03 AM   #1
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Keeping collision on car insur

I have some older model vehicles and thinking I should drop the collision coverage from my policy.

I have a 2000 Honda Ody which retails for about 6k and a 2003 Kia Sorento which retails around 9k.

What do you think?
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Old 02-12-2010, 06:05 AM   #2
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How much would you save each year by dropping it.
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Old 02-12-2010, 06:10 AM   #3
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"How lucky do you feel?"

It depends on how easily you can absorb the uninsured loss of either vehicle vs.the ongoing (and declining) cost of the collision insurance. I've read that one "should" drop the collision coverage when the vehicle is ten years old or thereabouts but if replacing a vehicle without that coverage would put a crimp in my finances I'd keep the coverage.

Given that I'm one of those people who keeps vehicles until reliability or parts availability become problems I keep the collision coverage longer than that.
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Old 02-12-2010, 06:55 AM   #4
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When I owned a car I never took collision, including for the one new car I bought. I feel I should only insure for events I cannot afford, since the payout ratio on all these policies is designed to be << 1.0 .
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Old 02-12-2010, 07:03 AM   #5
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one thing you might want to look at and drop if your retired is income replacement in case of an accident which was part of my policy in florida.
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Old 02-12-2010, 07:08 AM   #6
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In my opinion you should drop collision only if you are prepared to self-insure and have enough to replace either of your cars with an equivalent used car. The older the car gets, the less it costs to self-insure. In your case, given the car values you have stated, I would say that if you can keep $9K in your emergency fund then you should drop collision.

I usually carry collision/comprehensive on my cars for the first couple of years and then drop it. I don't think it is as necessary for me as liability insurance.

When a car is financed, collision/comprehensive is usually required as a condition of the loan.
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Old 02-12-2010, 09:05 AM   #7
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I worked in the actuarial field for 23 years, specializing in personal auto insurance.

If you get into an accident and it is the fault of the other driver, you can still seek compensation from the at-fault driver's Property Damage coverage. Without Collision (which pays you no matter who is at fault), it might take longer and be more difficult to get compensated, though.

Also, some states offer a coverage called Uninsured Motorists Property Damage. It is pretty cheap compared to Collision and will provide some insurance coverage for your car if you get hit by an uninsured driver or are the victim of a hit-and-run accident.
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Old 02-12-2010, 12:44 PM   #8
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I had an old car... and took a look at the cost to drop... by the time the car was that old, the insurance was $40 per year... so I did not drop..

Now, if you consider that I spent more than a new car over the past 30 years on this... it might make a difference. However, to me the cost is worth the benefits... I don't want to drop $20K on a car, get into a wreck that is my fault and drop another $20K...
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Old 02-14-2010, 02:44 PM   #9
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Thanks for all the replies.

As it turns out, I am only paying 60 and 80 respectively per year for collision. I think I will keep that coverage. My entire coverage costs $960 per year for both vehicles.

JD
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