Keeping Collision Insurance?

I’m getting a new car and I am wondering if I should keep the collision insurance on my present car, which I intend on keeping. The present car is a 1998 Nissan Maxima (SE I think). The car has 135,000 miles on it. I have kept it well maintained. It runs great and it is in excellent condition inside and out. I did have a front end collision 5 years ago (not my fault) and the car had been properly repaired at that time (over $5,000 in repairs). What do you think? I will not be driving it as my primary vehicle. It will be used by my wife mostly and a back up car when my new car is in the shop. Any advice you give is appreciated.

I recently dropped the collision coverage on my '97 Acura, even though it is low mileage (78K), it’s in great shape, and I’m keeping it. Once a car gets old enough, it’s not worth any money (at least not to an insurance company) even if you’ve maintained it well. You might as well save the money, because they won’t pay you any more than book value if the car is in another crash, and book value won’t be much.

I generally keep insurance on older cars because it’s cheap and it will fix damage from a minor accident (up to a few $1000). Obviously, any major damage would “total” the cars and I would have to pay for the repairs myself anyway. It might be a better deal to get rid of the insurance, but I think mine is less than $1000 per year per car anyway so I’ve never bothered to do the calculations.

Check the book value of your car. This is what you will get from the insurance company minus the deductable amount of your collision insurance. If the damage to your car is more than half its book value, the car will be considered a total loss. For a 10 year old car, you probably won’t get very much if the car is totaled. You may be wise to drop the collision (certainly keep the liability and probably the comprehensive). In case of an accident where you are declared to be at fault, you may find a shop willing to fix your car with used parts. You may also sell the wreck yourself. Whatever loss you incur you may be able to deduct from your income tax. I think you will find that the collision on a 10 year old car is not worthwhile.

My advice to my kids is until you can go out and pay cash for a replacement vehicle on the day of the accident, you may want to keep collision coverage.

Even though I meet this criteria, I still keep my $100 deductible coverage. This insures I am not at some other insurance company’s mercy if I am involved in a not-my-fault collision, and the other company is slow to pay. As soon as I am fed up with their antics, I subrogate to my collision coverage and deal with my insurance company. For $100 (that I get back after the insurance companies settle between themselves), it is worth it to not deal with someone else’s BS.

Call your insurer and ask for an itemized insurance bill for the Maxima as a second car. You will need to estimate how many miles you will drive each year and under what conditions it will be driven (e.g., 5000 miles, no commuting). You also need to know what deductible you want for collision coverage. They already know the car and they can tell you exactly what it will cost you to keep collision coverage. I have collisison coverage on all of my cars, including my 1998 Regal. It comes in handy if you need to replace a windshield, for instance, and I doubt that the cost is high on an infrequently driven car.