When to Drop Collision Insurance

[Teacher Terry]

So we have a 2008 Toyota Corolla with 55 k/miles. The collusion costs 38/month and we have a 500 deductible. I think it’s in good condition so BB values are between 4600-6200. But I know from previous experience even when it’s not your fault insurance may decide its condition is only fair. What do you guys do?

 

[Texas Proud]

I keep the insurance... and yes they will low ball you if you total it out... but the cost is low (lower than you are paying)...

 

[Jerry1]

In your case, I’d still keep it. However, if you’re prepared to lose $6K, then stop paying it. If you never have an accident you’ll be ahead. It’s a bet. As long as you see it as such, go for it. Personally, I think it’s time to get rid of it when your car is basically worthless. You pay about $500 a year so I’d keep it until the car is worth about $2-$3K.

 

[brewer12345]

I drop it usually when a car is 10 years old or the loss of the entire market value of the car would be negligible to me.

 

[Teacher Terry]

Jerry, thanks for that perspective. I think we will keep it a few more years.

 

[6miths]

We have dropped it at about 8 years. Making insurance claims is so impactful on rates here that it would be very seldom that I wouldn't just go through the body shop of a friend and pay it myself.

 

[Teacher Terry]

Actually I wouldn’t even fix the car and collect the money. Now if it’s not drivable it’s a different story.

 

[jollystomper]

We have a 2011 Corolla with 65K miles, but the collision with $1000 deductible comes out to about $10/month. At that rate we are keeping it.

It was damaged last year. There was no structural damage and it was still driveable,but we received an estimate of over $6K that had we gone with a claim, would according to the shop, likely have had the insurance company total the car. Fortunately we have a family friend who does collision work and only charged us $1400 to repair and repaint the damaged sections.

 

[Teacher Terry]

Thanks Jolly I will explore raising the deductible.

 

[CDRE]

I use the following Consumer Reports recommendations:
Set the deductible right. Raising your comprehensive and collision deductibles to $1,000 from $500 can shave, on average, 11 percent off your premium, says research by the search engine The Zebra. Just make sure you can afford to pay the deductible if your luck runs out.
Cancel collision and/or comprehensive on older cars. Consider dropping one or both when those annual premiums equal or exceed 10 percent of your car’s book value. Otherwise, you could end up paying more over time than you would recoup for repair or replacement of your damaged, stolen, or totaled vehicle.

 

[pb4uski]

Judgement call but I usually drop collision when the annual premium is more than 10% of the amount at risk (value less deductible)... so it sounds like you're close or may be there.

Funny... I just typed this and looked up and saw the prior post recommending the same thing.

 

[ncbill]

I cancel collision once the tax value drops under $3,000.

I never cancel comprehensive, however, since it is cheap...e.g. comprehensive coverage with a $100 deductible costs ~$5/month.

A comprehensive claim just paid for ~$3,000 in repairs on an older vehicle after a collision with a deer.

 

[sengsational]

When the cost of insurance annually is greater than the book value of the car divided by your rate of making a claim.


The rule of thumb is that "most people" have a claim every 10 years, which turns into $4,600/10 = $460. You are on the cusp because $460 is almost equal to $38*12.


If you feel you are less likely or more likely to have a claim, use something other than 10 years.



I think dialing the deductible to lower the premium is usually a good idea....most of us on this board are insuring for a big event, and would not bat an eye if we had to lay out an unexpected grand.

 

[scrabbler1]

I have heard the 10%-of-premium limit, too. I agree with ncbill about keeping Comprehensive, especially with full coverage glass, because that cause of loss is high-frequency and low-severity and it doesn't really have anything to do with the age, mileage, and condition of the car. Comp tends to be far cheaper than Collision, so you aren't paying much for the coverage. Back in 2004, I dropped Collision on my 13-year-old car but kept Comp.


Like the OP, I have a Corolla close to his (mine is 2007). I have only 40k miles on it and pay about $120 a year for Collision ($500 deductible). My car's BB value is in the $3k-$4k range, so I'll be keeping Collision for a while longer. OP, I agree with pb4uski that you are getting close to being able to drop Collision. Not sure you are there yet.

 

[grasshopper]

I ask myself this question every 6 months my March renewal shows $6 a month collision, $5 comp 0 glass, $1K deductible. Blue Book still at $8500 for my 2009 GMC 4WD crew cab. I just stick with it.

 

[Car-Guy]

1000 deductible here. I drop everything but liability when the blue book value drops under ~15k. But it's rare for me to keep a car that long.

 

[mountainsoft]

So we have a 2008 Toyota Corolla with 55 k/miles. The collusion costs 38/month and we have a 500 deductible. I think it’s in good condition so BB values are between 4600-6200. But I know from previous experience even when it’s not your fault insurance may decide its condition is only fair. What do you guys do?

We have never paid more than $4000 for a car and always pay cash. With this in mind, we haven't carried collision insurance on our cars for over 20 years. It sucks when we have an accident, but we just buy another sub-4K car with cash again. Our cars are just transportation, not status symbols.

I currently pay about $175 every six months for my 2000 Jetta (low mileage discount). My wife pays about $220 every six months for her 2004 Jetta. We'll apply for the low mileage discount for her too once she retires and isn't driving to work every day.

If you can afford to pay cash for a new car when the old one is wrecked, I see no point in insuring your own vehicle.

 

[Brian]

I typically only carry insurance for large losses. If I can absorb the cost of a totaled vehicle due to my fault, I stop collision.


I do carry a lot of coverage for the damage I many cause to others (vehicles, property, and lives). Typically enough that the insurance company will take an active interest in any major accidents.

 

[NanoSour]

According to insurance statistics, the "average" driver gets in to an at-fault accident once every 11 years. Most on this board are above average drivers so the savings over that time would be significant.

Personally, I self insure when the trade-in value gets below 8K, or roughly 10K retail value.

 

[Katsmeow]

I don't think I would ever drop collision insurance because I would trade in a car before it got to that small a value. I strongly believe that newer cars are usually safer. We do have a car that is 8 years old but it is still worth enough that we would still keep collision.

 

[travelover]

........ Most on this board are above average drivers ...........

Heck, we're above average everything.

 

[AS2019]

As an anecdote, I had a car that was worth about $6,000 and I haven't had an at fault accident in decades. I decided it was worth the risk to just self-insure, so I dropped the full coverage to save a little bit of money. About 3 months later I was hit by another car and my car was totaled. Even though I thought I was mentally prepared for this possibility, it turns out I wasn't.

Try doing a web search for "percentage of uninsured drivers" in your area. The number might surprise you.

 

[mountainsoft]

According to insurance statistics, the "average" driver gets in to an at-fault accident once every 11 years.

Hmm... My last accident was in 1988 when a teenage gal rear ended me at a stop light. I've never had an "at fault" accident.

My wife's last accident was over a year ago when a little old lady pulled out in front of her on the highway. She couldn't stop in time and totaled her car. My wife has never had an "at fault" accident either.

 

[38Chevy454]

One thing to consider is that collision will also ensure your insurance co will fight for you, even if not your fault. Example - if you have liability only and get rear-ended, 100% other person's fault. You are at the mercy of the other person's insurance co. Not just for any potential value low-balling, but also for any other expenses related such as rental car or whatever. If you have collision, your insurance co will take over fighting the other insurance co instead of you. With liability only, the other insurance co has no incentive to have a quick resolution or to give you good service. Just something to think about. Similar analogy to underinsured/uninsured coverage, it makes your insurance co to fight for you.

I do agree that there becomes a limit on older vehicles where liability only makes sense. I usually put that around $3K vehicle value myself.

 

[braumeister]

One thing to consider is that collision will also ensure your insurance co will fight for you, even if not your fault.

Very true. I was hit in 2013, 100% the other guy's fault. But his insurance was pretty flaky with all sorts of complications. So I just had my car fixed using my own collision and paid my $1,000 deductible. My company went into protracted arbitration with the other company and around six months later they prevailed and gave me my $1,000 back.