When do you drop Collision & Comprehensive Insurance?

[scfr]

Our semi-annual car insurance bill is coming due.

One of our vehicles now has a value of around $9,400.
We have carried collision & comprehensive insurance on it since we bought it, but I'm thinking it's time to drop it. The C&C insurance costs $207 per year and has a $1,000 deductible. We own the car outright, so there is no requirement that we carry C&C. We could replace the car if (worst case scenario) it were totaled without negatively impacting our other financial priorities.

I think what triggered me thinking about dropping the C&C is that the value of the car has fallen below $10K. That's a pretty arbitrary way of thinking about it.

For those who have made the decision to drop C&C on a vehicle you own, how did you decide it was time?

[~bs]

Our semi-annual car insurance bill is coming due.

One of our vehicles now has a value of around $9,400.
We have carried collision & comprehensive insurance on it since we bought it, but I'm thinking it's time to drop it. The C&C insurance costs $207 per year and has a $1,000 deductible. We own the car outright, so there is no requirement that we carry C&C. We could replace the car if (worst case scenario) it were totaled without negatively impacting our other financial priorities.

I think what triggered me thinking about dropping the C&C is that the value of the car has fallen below $10K. That's a pretty arbitrary way of thinking about it.

For those who have made the decision to drop C&C on a vehicle you own, how did you decide it was time?

maybe arbitrary, but a good rule of thumb. You weigh the cost of the insurance against the benefit gained in the event that the insurance option needs to be exercised. Similar to phone insurance.

Personally, I think $10k is still a lot, I'd drop a $500 deductible to $1000 maybe at 10k value. I probably wouldn't drop it altogether until the value of the vehicle goes to $5k.

[disneysteve]

I think the rule of thumb I've heard is if the insurance is more than 10% of the value of the car.

That assumes that you're in a position to replace it out of pocket if it gets wrecked.

[~bs]

I think the rule of thumb I've heard is if the insurance is more than 10% of the value of the car.

That assumes that you're in a position to replace it out of pocket if it gets wrecked.

The insurance cost is 10% of the vehicle? In this case, it would translate to only a $2k value?

[disneysteve]

The insurance cost is 10% of the vehicle? In this case, it would translate to only a $2k value?

From insurance.com:

If your premiums exceed 10 percent of your potential payout, experts say you may want to drop your physical damage coverages. Your potential payout is the value of your vehicle minus your deductible.

So if your car is worth $9,400 and you have a $1,000 deductible, your potential payout is $8,400. You should drop coverage if it is costing you $840/year or more.

[MonkeyMama]

We drop at $5,000. That's just always what we have done. It's arbitrary but it works.

I know people who get into accidents like every single year. They should keep full coverage. Just to say that it is very individual.

If for any reason you decide to keep the insurance, I'd consider a higher deductible.

Given what you shared in the past about your finances/assets, I think dropping at $10k is fine in your situation. I'd probably do the same.

[~bs]

From insurance.com:


So if your car is worth $9,400 and you have a $1,000 deductible, your potential payout is $8,400. You should drop coverage if it is costing you $840/year or more.

isn't 840 really high? OP said their coverage for that insurance is $200? I can understand if you have multiple crashes or duis or something, but $840 is a lot. I think my auto insurance w/ $1000 deductible, mostly maxed out other property and personal injury coverages, homeowner insurance, and $1mil umbrella is around $840 a year.

[Nutria]

isn't 840 really high? OP said their coverage for that insurance is $200? I can understand if you have multiple crashes or duis or something, but $840 is a lot.

That's why DS thinks that OP should not drop C&C until the value of the car gets down to $3000. (Subtract $1000 deductible from that to get $2000.)

[scfr]

isn't 840 really high? OP said their coverage for that insurance is $200? I can understand if you have multiple crashes or duis or something, but $840 is a lot. I think my auto insurance w/ $1000 deductible, mostly maxed out other property and personal injury coverages, homeowner insurance, and $1mil umbrella is around $840 a year.

I found something very similar to what Disneysteve wrote on Consumer Reports page:
Quote - Consider cancelling your collision and/or comprehensive coverage when the annual cost equals or exceeds 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. - End Quote
Link for the fact checkers: https://www.consumerreports.org/cro/...ying-guide.htm

But you are correct, ~bs, that seems like an extraordinarily high amount. $840 would be higher than the total annual insurance bill for that vehicle (currently $618 including the C&C), and that is with extra liability coverage. I'm assuming C&C drops as the value of the car drops, so if you followed that rule of thumb it almost feels like you'd never drop the C&C coverage.

It kind of calls that particular rule of thumb in to question, doesn't it?

[scfr]

We drop at $5,000. That's just always what we have done. It's arbitrary but it works.

I know people who get into accidents like every single year. They should keep full coverage. Just to say that it is very individual.

Makes sense. I wish I could remember when we dropped the C&C on our older vehicle. It's been so long that I can't remember, but I think it was somewhere around the $5K range. Now, all these years later, $10K does feel OK for us. I wouldn't necessarily recommend that for anyone else! I was just curious to hear how others made the decision.

[snafu]

I dropped CC when our [secondary] car dropped under KBB $ 9K value based on ...cost using an insurance broker that put our vehicle + home owner coverage to 'bid', miles driven per year and clean driving record.

I finally sold the [2002] car last month and haven't replaced it because I haven't found it inconvenient to share the primary vehicle.

[disneysteve]

I just checked kbb.com and I'm actually paying over 10% for the C&C coverage on my car. They're estimating trade in value of $3,500. I have a $500 deductible so a $3,000 potential payout. My C&C coverage is $350.

I'm hoping to keep this car another 4-5 years but I guess if it gets wrecked, the insurance company will total it and I'd get $3,000 to put toward the next one.

[scfr]

Thanks to all who shared their experiences and decision-making processes.
I just called and cancelled our C&C coverage, reducing our annual premium cost by $207. I can't say that we "saved" anything because we can't know that until we get to the end of the car's "life" and know the accident history (hopefully none). Cancelling C&C coverage is definitely not something I would put out there as a blanket recommendation, but in our case we decided to take the "calculated risk."

[bjl584]

The 10% rule is a good one to go by.
Careful though.
My auto insurance is tied to my homeowner's insurance. By keeping full coverage on the auto I get a significant discount on the overall policy.

[disneysteve]

we decided to take the "calculated risk."

All insurance policies are a calculated risk. I hope this one pays off for you.