Canceling collision/comprehensive on our cars

[WanderALot]

Hello,

We currently have two cars for which we carry comprehensive/collision (1k deductible):

'99 Nissan Sentra, Blue book of around 5k
'98 Nissan 200 SX, Blue book of about 5k

The comprehensive/collision costs us about $225 for each car. The rule of thumb that people seem to cite is to cancel the comprehensive when the premiums gets to be about 10% of value of the car. Well, I'm not sure if our insurance company will actually consider the cars to be worth 5k and since we have a 1k deductible, we'll only get back 4k. We save quite a bit of our incomes, so self insurance would seem like the way to go.

Would you cancel comprehensive/collision?

Also, do insurance companies generally look at the blue book value to determine their awards? I picked the "private party value" instead of "trade-in" or "suggested retail" to come up with our cars' value.

Thanks.

 

[polloloco]

At the quoted vehicle values and insurance costs, I would cancel and take the risk myself.

 

[Texas Proud]

I agree... cancell....

But, I am surprised the cost is so high... my old 95 Monte Carlos is maybe $100 or so... and my other old car was cheap also... never seemed to be 'to expensive' to drop...

And, you lost towing and rental car if you droped them (at least my company would not let me have them)...

 

[Empty Pockets]

I'd say you're to the point to go to just liability. You could keep comprehensive without the collision, then you would still be covered for losses out of your control such as fire, hail, vandalism, theft, hitting a deer or glass breakage. If this doesn't cost too much, it may be worth keeping. Turning in a comprehensive loss shouldn't impact your premium either. I would consider keeping comp.

You've got a couple Nissan's, do you have a shop that you know that can work on them for you on a "cash" basis ? Especially on the windows ? There is a huge mark up on glass when the insurance company is paying, if they know you're paying cash yourself you can often negotiate a much lower price for the same windshield. Likewise, if you have a fender bender there may be ways to repair the damage, or drive it like it is, rather than fix it back to like new condition.

Texas Proud is right about the towing & rental, but this is something it sounds like you can afford to handle yourself anyway. In my opinion there are better ways to spend insurance dollars (higher liability limits & UM limits).

As for determining the value of your car, most insurance companies subscribe to a service that is updated daily for cars in your local area. What a lot of them do is just call a couple dealers in the area and ask what would the retail cash price be for that car on your lot today. The Blue Book gives you an idea, but like most dealers, the insurers don't even look at KBB.

 

[Andre1969]

The only time I had a car totaled, the insurance company gave me the KBB retail for the car. It was a 1986 Monte Carlo that got T-boned. They estimated the value at something like $2300 or so, and the cost to repair at around $1500. The guidelines they used for totaling a car was when the estimate surpassed 60% of the book value of the car.

And in all honesty, I'm sure it would've cost more than $1500 to fix this thing right. The impact smashed the right side fender, gouged out the door, and mashed the rear quarter panel under the opera window. It also threw it out of alignment, bent the rim and hubcap, and the impact was just hard enough to push in the A-pillar and crack the windshield. And to top it all off, the car had two-tone paint, which would be more expensive to fix. There's no way in hell all that could've been done for $1500!

I still have full coverage on my 2000 Intrepid. I think I have a $500 deductible for collision and $250 for comprehensive. Off the top of my head, I think it adds about $300 per year to the premium. Considering I have about 130,000 miles on the car, it might be time to consider dropping the coverage on it.

I guess I just still have it in my mind that that is "cheap" for car insurance! My policy right now is about $1200 per year total, ~$600 annually for the Intrepid with full coverage and ~$300 each for a 1985 Chevy pickup and 1979 New Yorker, both of them liability-only. Heck, I still remember my first year of driving, back in 1987, my insurance was $1361 for liability-only on just one car! Still, I guess even when something seems low-priced, it's still a good idea to see if you can save even more.

 

[FinanceDude]

Hello,

We currently have two cars for which we carry comprehensive/collision (1k deductible):

'99 Nissan Sentra, Blue book of around 5k
'98 Nissan 200 SX, Blue book of about 5k

The comprehensive/collision costs us about $225 for each car. The rule of thumb that people seem to cite is to cancel the comprehensive when the premiums gets to be about 10% of value of the car. Well, I'm not sure if our insurance company will actually consider the cars to be worth 5k and since we have a 1k deductible, we'll only get back 4k. We save quite a bit of our incomes, so self insurance would seem like the way to go.

Would you cancel comprehensive/collision?

Also, do insurance companies generally look at the blue book value to determine their awards? I picked the "private party value" instead of "trade-in" or "suggested retail" to come up with our cars' value.

Thanks.

Is the blue book number you quoted wholesale or retail? Most insurance companies will offer you a number between loan value and wholesale for a wrecked car, so I would keep the liability, get an umbrella if you don't have one, and drive safely..........

Also, for those of you who have collision/comp on your cars, if you go to a $1000 deductible, you will save mucho dollars each year........

 

[justin]

I'd drop it. My cars still have comp/coll coverage, but I pay 1/2 what you pay, and the cars are 1.5x-2x the value of those you noted, so I'm getting a "good deal".

Would paying $4000 out of pocket to replace either of these cars severely impact your financial situation? Do you have an emergency fund and/or sufficient cash flow to buy a new car in a hurry if you need a replacement?

 

[cute fuzzy bunny]

For cars of a book under 5k, I wouldnt bother.

I hold collision and comp @ $2500/ded on my 2001 rav4. Anyone dings or dents me, I eat it. It gets totalled or massively bashed I'll get a good chunk of change to buy something else or get the major problems repaired with only a little bit out of pocket. Still get the free glass replacements with the deductible waiver.

Sort of striding the line between self insuring and being fully covered.

Its cheap for me...I dont have the #'s in front of me but its under $100 every six months for the coverage against a retail book value of 15k.

 

[SecondCor521]

WanderALot,

Well, $4000/$225 = 17.78 years. How frequently do you total your cars? How risk-tolerant are you? If you totaled one of your cars tomorrow, would the $4k make a big difference to you?

It's subjective. Personally I prefer to err on the side of spending too little on insurance rather than too much; my theory is that I will win the insurance bet over the long haul if I self insure, particularly for the first few thousand dollars. I carry just liability on my 1995 Toyota, but it's only got a KBB value of about $3K. I think I canceled C&C a few years ago when I was in about the position you were.

2Cor521

 

[WanderALot]

Thanks for the replies everyone! I think I am going to cancel it, nice to have an almost unanimous response from you guys!

You've got a couple Nissan's, do you have a shop that you know that can work on them for you on a "cash" basis ? Especially on the windows ?

Well, I'm trying to do most of the stuff myself. Both the cars are very similar so that makes it a little bit easier. I'm not too much of a car guy, but I'm slowly learning. Since the cars are not new, we really don't care too much about dings.

Is the blue book number you quoted wholesale or retail? Most insurance companies will offer you a number between loan value and wholesale for a wrecked car, so I would keep the liability, get an umbrella if you don't have one, and drive safely.........

The blue book value I quoted is the "Private Party Value". It's less than the suggested retail value, but it's more than the trade-in value.

Still get the free glass replacements with the deductible waiver.

Is this standard with most policies?

Would paying $4000 out of pocket to replace either of these cars severely impact your financial situation? Do you have an emergency fund and/or sufficient cash flow to buy a new car in a hurry if you need a replacement?

Our emergency fund is fully funded and we intend to pay cash for our next car. We are in CA, so that might be why our premium is so much higher than yours. The reason that I even started looking into this was because our comp/collision premium actually went UP this year even though we haven't had any claims! This made no sense since the cars are older and worth less so you'd think they would go down. Mercury Insurance said that it was because they haven't raised rates in a while and they brought it up to market.

 

[cute fuzzy bunny]

Not sure about most policies, but my Farmers policies under comprehensive include a $100 glass deductible, which you can buy off for a few bucks. I seem to need a new windshield about every 3-5 years from rock chips and cracks , and those are a little bit expensive.

 

[shiny]

What about rental cars?

If the OP (or other interested parties, like yours truly) rents cars often, is it worth it to keep the cheap collision to insure againt damage to the rental cars? We never buy the ins. through the agency.

 

[Empty Pockets]

Good point Shiny, different states handle this differently.

If you have a personal auto policy in Minnesota, a rental car is covered under the property damage liability coverage, so comprehensive & collision aren't necessary to cover the rental car (up to the amount of property damage liability coverage you have). Everyone with an auto policy in MN has at least $35,000 of coverage that can apply to a rental car. However, this is just for Minnesota policies, each state is different and I'd advise you to check with yours. Ask your agent or company directly where to find it on your policy, if they can't or won't, find another agent or company.

Some other issues that come to mind with rental cars. Not only will the rental agency charge you for damage to their car, they'll charge you for loss of use for the time they could rent it out while it's getting fixed. Your comprehensive or collision probably won't pay for this.

Once there is a loss reported to the rental agency, they will max out your credit card. Make sure you have another card with to use. I saw this happen to a couple that went on vacation to Hawaii, they were hit from behind when they were leaving the agency's parking lot and the rental agency maxed out their card for the whole week that they were on vacation. Sure, the insurance finally paid for everything, but what a head ache.

You may also want to shop for a credit card that offers the best collision damage waiver coverage for rental cars.

If you want to guarantee no head aches while you rent a car, you may want to consider the CDW. Then you can drop off the keys no matter what and catch your flight home.

Didn't mean to ramble off topic, but it is something to consider when dropping comp & coll. from your policy.

 

[bongo2]

The rule of thumb that people seem to cite is to cancel the comprehensive when the premiums gets to be about 10% of value of the car.

You should cancel colision and comprehensive when 1) you are comfortable with the possibility of paying for the cars yourself, and 2) the cost of the insurance is significantly more than the expected payout. The second one is almost a given, but some people are "able" to make good use of their insurance.