Time to drop full coverage


#1

I’ve read that to decide if you should drop from full coverage to liability insurance, you should consider if you can afford to replace the vehicle in the event something happened. If not, keep the full coverage. Any other thoughts or opinions on this?


#2

Yea…that’s what I do. But … You even though you may be able to replace it yourself…do you want to spend that much cash…and in doing so will it hurt you financially. I have collision on my 05 4runner. I can afford to replace it…but we would be hurting if in the next couple of years some other financial disaster happens.

Millionaires like Bill Gates or Warren Buffett don’t have insurance. They can easily afford to replace any vehicle they wreck. And any liability that may incur. The rest of us need insurance.


#3

All insurance is a gamble. I always drop full coverage and switch to liability on any vehicle that I own that’s over 5 years old. So far…the gamble has paid off for me because I’ve never had to replace a vehicle. It’s really your choice and your’s alone.


#4

Keep in mind that “full coverage” gets pretty cheap as the car gets older because there is not as much risk to the insurer. You need to play “what if”; What if the car gets totaled? Do I have the money or can I (or do I) want to borrow it? That might be easier than a semi-destroyed car, do I fix it or take the money and scrap it? As @MikeInNH and @missleman post, it is your choice.


#5

Just got my new policy for 2014 from the insurance company.

For a 2007 Corolla, the cost for $1,000,000 of third party liability is $329, for collision with $150 deductible it is $240 and comprehensive with $250 deductible is $47 per year, for a total of $616. No way I would drop the third party liability; the collison and comprehensive is only $287, and is hardly worthwhile dropping, since the deductible is only $150.

If the car gets to be 20 years old and worth very little, I would drop the collison and comprehensive. Thee is a point, probably when the car is 15 years old that it will become worthwhile to drop the collision.


#6

Just be a little careful. On my third car, a 95, that just sits in the garage 90% of the time unless I need the stall, I just carry liability on it. That costs me about $100 every 6 months. My other cars have full coverage for about $220 every 6 months. So the difference is about $120 every 6 months. I could care less about the 95 and wish it were gone so if anything happened to it no big deal. It does sit in the garage though so not subject to vandalism. Broken windows or slashed tires can be very expensive so if it sits outside you may want to consider the cost/benefit.

So just check the cost differnce and know what you’d do if it were vandalized, hit and run, or you hit a deer with it.


#7

Yes, I keep my full coverage, but I admit I weigh out the options about once a year


#8

As others have said, drop it if you’re fine with replacing the car if it’s totaled without the insurance compensation. If that would be a real hardship, I’d keep the coverage.

For me 10 years is the time I let it go.


#9

One coverage that paid off for me is uninsured motorists. That extends to all our cars. I have collision and comprehensive on our newer cars as well as liability, but I only had comprehensive on my Oldsmobile Cutlass Salon that was only 25 years old at the time. I was hit by a woman in a parking lot who took off immediately and clipped another car on her way out of the parking lot. She was being chased by the manager of Hobby Lobby because she had shop lifted a dozen candles. I got her license number and the police were called. I had to wait along with driver of the other car that was hit and the manager of the store while the police officer filled out a report. I was told that I had to call my insurance company. I asked why I had to do that as I didn’t have collision. The officer told me that it was the law. I did call my company and reported the accident along with the number on the police report. A couple of days later, the insurance called back and said that the person that hit me did not have collision insurance, but I was covered under the uninsured motorists part of my insurance. I was told to take the car to a couple of shops for estimates. I said that I was pretty busy, but would try to get it done in the next couple of weeks. Actually, I was rather embarrassed to go to a body shop to repair the dent in my old heap. About three days later, I got a call from my insurance company at work and was told that the adjuster was in my driveway looking at the car and wanted to know where to leave the check. I had driven my minivan to work and was between classes so I drove home. The adjuster said she could issue me a check for $250. I said, “Fine, I’ll go get the title”. I assumed that she had totaled the car and this would be my chance to please my wife and get rid of it. She replied, “Not on your life, buster. I don’t want the car–we are just compensating you for the damage”. She had a printer in the back seat of ther car and issued a check on the spot. The dent in the quarter panel was never fixed.


#10

@Triedaq Agree that “unisured motorist” is a good choice. There are 3 native reservations in our area and many of the residents drive without insurance or expired licenses. A number of my friends hav been hit.


#11

“…if you should drop from full coverage to liability insurance, you should consider if you can afford to replace the vehicle in the event something happened.”

That sounds like a good policy to me, although I’ve based my coverage decisions on what I could afford at the time, but yes, by the time I dropped full coverage on my car, I also owned two motorcycles and the car was worth about $2,000. If it’s ever in a collision, there is no doubt it will be totaled. It helps to have a motorcycle or two to use while I’m between cars if that ever happens. It helps to live in a warm climate too.

I guess I should amend your rule a bit. Drop full coverage if you can afford to replace in the event something happened that was your fault or ruled a no-fault accident. If you’re in an accident that is someone else’s fault, it shouldn’t matter whether you have full coverage because it will be the other guy’s insurance company paying for repair/replacement.

If you’re the type of driver who has never been in an accident that was your fault, the gamble is relatively safe. However, if you’re the type of driver who has accidents on your record that were no-fault or your fault, you might want to consider keeping full coverage.


#12

I was just considering this today. I have a 2008 Matrix, have not checked the value but it would take quite a bit to replace. Probably down to 8K miles/ year. last at-fault accident about 1994. I think I keep it on for a couple of years. I agree about the need for uninsured motorist coverage, and I have plenty of liability coverage. This is a litigious country.


#13

Great comments. Let me add on a personal note, it may be worth dropping coverage ( collision) if the car has started to rust or has dings and accumulated dents, even if not too old. Then, like others have said, it depends on the car itself…and how you reasonably feel about letting it go. If you have a very old but pristine Mustang that has some memories…hmmmmm. Not as easy a decision. So, there is no automatic time for a decision to drop.


#14

Just to clarify, In Minnesota anyway, liability is absolutely required and pays damages to others from your actions. Collision is optional and will pay for your car regardless of who caused an accident or if it was a tree that was hit. This is useful if someone hits you and you don’t have to wait to collect from their insurance. Comprehensive is optional and pays for things like broken glass. Then there is under and uninsured that will pay you for injuries from someone else if they are un or underinsured. That’s all optional including towing etc. So you can’t drop liability but everything else is up to you.

You used to have to show your insurance information when you got plates every year. Under our fearless governor though, as a cost saving, now you just check a box saying you have insurance but don’t have to list your policy number or company. Of course there are a lot of folks running without insurance now.

Some people just don’t seem to have a culture of insuring themselves for car, apartment, health, life, you name it, and we all pay the price for it. Apartment burns and they didn’t want to pay $50 for a renters policy so we take up a collection. Cripple someone with their car and we pay for it. Need medical care and the emergency rooms provide it from their “huge” profits. Die prematurely and the wife and kids are destitute for lack of life insurance so we pay the price. So time for people to man up a little and take responsibility. Sorry for the editorial but I’ve just been flabbergasted with some of the folks at work when the widow comes to ask about insurance and you have to tell them he never signed up for it.


#15

I own a 20 y.o. pickup, have few assets, and am “judgment-proof.” I carry state minimums only.

I worry that an unsually high liability limit might be an “attractive nuisance” in that it might give an accident victim incentive to go full-court-press to max out my coverage vs. just taking a settlement.


#16

I was told by an insurance agent to carry the amount of liability insurance at least equal to your assets. Otherwise, if the judgment is more than the limit of your liability coverage, your assets can be used to make up the difference.


#17

The best combination is liability plus an umbrella insurance to cover for additional stuff. The umbrella is an “umbrella” for homeowner’s/auto etc. A good insurance agent could get some quotes. The liability limits on the car would decide how much the umbrella costs, you have to find the happy spot.


#18

Yep, umbrella policies are very cheap. Somewhere around $100 per million of coverage.


#19

If you have a loan out on the vehicle you need to check to see if you are required to have full coverage. Typically you will be.


#20

You really have to read your policy, and consider the value of your car. You can raise the deductible that will save some dollars, though certain loans may require certain coverage. I think the range of $1000 plus deductible makes the most sense, but you have to consider also if the accident is not your fault, the other insurance policy will kick in, or if uninsured fix except for the deductible until collected from the guilty party.