turning 25, auto insurance question/opinion

[amarowsky]

Hows it going folks, got some opinions/facts/advice I'd like to dig from your frugal skulls.

About to turn 25 in January, so according to my last visit to AAA insurance, my overall rate is supposed to drop roughly 250-350% from the current monthly charge of 167.98$. I currently owe 2300 on my 2001 crown victoria, that has about 44k miles on it, (bought it with 16k), and paid a total of 7K for it in january of 2010. With the 2300 i have loaned for it, i have a rate of 5.75%.

I just got a bonus check for 1880, and have 3 rent payments due totally 900 from my roomies, and a 1600 net regular check all coming in on friday. I currently don't owe a dime to ANyone/thing except for my mortgage and my car. I'm planning on paying off the car, and useing the rest to refill towards my full EF fund.

My real question is***: Although I don't turn 25 for another 2 months, considering I'm insuring 2 vehicles my 2001 ford crown vic, full coverage and (belive me) most cost efficent/rational full coverage @ $133/mo and my 1991 2500 sierra work truck only PLPD(liability in michigan) $35/mo, grand total of 167.98/mo. It'll drop like 250-350 according to their estimate in the next few months. However ***AFTER the crownvic is paid in full, I no longer have to pay for full coverage. This should potentially save me 60-80 bux a month. Do you think it would be worth it to forgoe this insurance and save the extra money for possible future repairs or towards another vehicle? Or do you think the insurance is worth it to keep incase of a random accident happening. KEEPING IN MIND i do have another vehicle to use incase I am out a vehicle when needed.

I'd appreciate your thoughts/opinions/experiences/and overall feedback

[MonkeyMama]

How much is the Crown Victoria worth? How prone are you to accidents? (Likehood of accident?). What is your deductible on the insurance?

I am pretty agrresive on dropping collision insurance, so would probably lean towards it more than others (I've barely ever had the coverage in 20 years of driving). My rule of thumb is to drop the coverage once car drops below a $5,000 value. Consideration is that I am not accident prone (while some people just are). & by the time you notice the car is worth less than $5k, and get around to dropping the coverage, truth is it is probably worth even less, and the insurance company thinks it is worth even less than that. I also keep high deductibles, which means at that point I am only really insuring $2,000 or so at best. I've saved thousands over the years not having the insurance, personally. (Though 10 of those years I probably only drove cars worth $500-$1000, anyway. Insurance was obviously not necessary!). I've dropped collision on two vehicles, once they dropped below $5k value. One I eventually sold - the other we have driven many years since.

Third point is I have enough cash in the bank to replace vehicle. This piece is moot if you have another car.

You may want to insure for a while - the low mileage may make the car rather valuable to you on some level. If you had a ton of cash, I wouldn't bother though.

[dczech09]

I do not think you should necessarily base the decision so much on the value of the car, but more so on your ability to insure yourself. So my question is this: if you get into a collision tomorrow, will you be able to replace your car yourself? And when I say replace, I mean with cash; let's leave financing out of the equation.

If you can write a check and replace the car, then drop the collision. If not, then keep it.

Now obviously the value of the car comes into play when determining if the deductible and coverage are worth the cost. However when simply making the decision of whether or not to keep collision, it comes down to affordability.

[bjl584]

I would argue that if your car still has value to you as transportation and you have no plans to replace it anytime soon, then keep your coverage. I'd rather pay $500 for a deductible than shell out $5000 for a replacement vehicle should something happen to your current car.

I'd be more inclined to shop around for better rates on insurance than I would be to think about dropping my coverage.

[amarowsky]

I looked at Kelly blue book, and it says the car is worth 5700 wing wangs(USD) in its condition. Up to 6500 high route, and 4800 low route. I don't have that much is solid cash right now, prolly closer to 4000 cash. But I do have a really good record, no points on my license. Only accidents I have been in were 2 fender benders resulting in no damage when I was younger. I'm gonna check how much the actual difference is when I drop the collision. Or possibly just see how much lower I can get it by upping the deducticbles.
I believe the car was insured for more than I payed for it, because the AAA insurances complimented me on snagging such a good deal. I think orignal price was close to 7000 and its insured at a value of like 8200.

But to answer earlier question, I have never made an insurance claim on any cars I've owned. Or totalled out a car ever.

[bjl584]

Originally Posted by amarowsky

I looked at Kelly blue book, and it says the car is worth 5700 wing wangs(USD) in its condition. Up to 6500 high route, and 4800 low route. I don't have that much is solid cash right now, prolly closer to 4000 cash. But I do have a really good record, no points on my license. Only accidents I have been in were 2 fender benders resulting in no damage when I was younger. I'm gonna check how much the actual difference is when I drop the collision. Or possibly just see how much lower I can get it by upping the deducticbles.
I believe the car was insured for more than I payed for it, because the AAA insurances complimented me on snagging such a good deal. I think orignal price was close to 7000 and its insured at a value of like 8200.

But to answer earlier question, I have never made an insurance claim on any cars I've owned. Or totalled out a car ever.

It comes down to risk.

Do you want to take a chance at saving a few hundred a year if it means spending the $4000 that you have saved for a new car should your current car get totaled in a wreck?

Would the $4000 you have saved be enough to get a quality relacement car, or would you have to finance? Are you in a position to take on auto loan debt if need be?

If you feel that the risk is worth it, then look at dropping your collision. If not, then keep it and maybe shop around for cheaper rates.