Auto Insurance Help!

[sweeps]

Ok. If it were me*, I would cancel the coverage:

1. You'd get less than $3,000 if you total the car (and that amount will go down over time as the car continues to depreciate).
2. We've been talking about worst case scenario: totaling the car AND it being 100% your fault. Obviously that's not going to be a common scenario.
3. You seem to be a good saver and plan on banking your savings from this.
4. There is the small added benefit of not having to fight with the insurance company if there is an accident. You'll decide what you want to do to fix the car, if anything. There's no haggling about how much the ins co owes you.

* This is just what *I* would do. Please run the numbers for your own situation. I would feel awful if you made a decision based on my advice and it ended up not working for you.

[InDebtInDC]

The year of the car is not relevant if you know the insurance company's estimated replacement value.

I may choose to insure a 2001 vehicle if it is still worth $10,000, but forego coverage on a 2007 vehicle that is only worth $2,000.

Keep in mind that the estimated replacement value is based on book value, and generally new cars lose value much more quickly than older cars where most of the value has already depreciated.

For a newer car, I recommend appraising the car's value at least once every 2-3 months and reevaluating your personal situation to see if your total loss payout and premium still make sense. If anything, for newer cars I recommend lower deductibles as well as GAP for loan/lease payoff.

For older cars, you can pretty much set it and forget it for the entire term even if you have a 1 year policy. Older cars probably won't change much in value.

Also, the year of a car, as well as make, model, trim, and options determine the rate of the policy. If you haven't already bought a car, changing these variables may have a large effect on your premium for the same type of coverage. If you're already stuck it may not be worth to trade in.

Not sure where I said such a thing?

I never said you said anything. I was quoting for context. I wasn't responding to any particular comment.

If the insurance company is covering you for $X and you drop coverage and total your car, do you have $X on hand to put toward another car? Many people don't. And many people can't just live without a car. So for these people they may want to keep the coverage to protect themselves.

Like I said above, if it's your fault that you lost your car then I have less sympathy. If it wasn't at-fault then the other party pays. I still agree with carrying uninsured/underinsured coverage to help out while you sue them.

2. We've been talking about worst case scenario: totaling the car AND it being 100% your fault.

It may not be so bad if you have adequate collision and liability coverage. The worst case would be not-at-fault accidents that involve multiple other drivers who are at fault. Collecting money from others are always more difficult than collecting from your own carrier. You have to foot the bill while you sue the other parties and wait for a settlement/judgement.



Overall insurance is a highly individualized decision that is specific to the person's risk tolerance. If you aggressive, you can be self-insured. If you're conservative, load up on line coverage with low deductibles.

[Rick01]

Have you tried comparison shopping and making sure you are getting any and all discounts that may be available. Maybe you can lower your premium and still protect yourself with full coverage.

[maat55]

Most financial institutions will allow you to drop your insurance to liability when get to 2500 and under. You can check, they probably will allow you to drop to liablity now if you want.

Make sure you are not under insured. It's best to have at least 50/100/50.

Also, check your rates on 1000 deductable, it pays off in the long run to carry a higher deductable.

[InDebtInDC]

Have you tried comparison shopping and making sure you are getting any and all discounts that may be available. Maybe you can lower your premium and still protect yourself with full coverage.

What is "full" coverage? There are many different lines of auto insurance coverage, and each line can have a variable deductible. What is "full" coverage in your mind?

I'm not trying to be a smartass. Based on my experience in the insurance industry, there is no agreement on what "full" coverage means. This is generally a term used by consumers.

Most financial institutions will allow you to drop your insurance to liability when get to 2500 and under. You can check, they probably will allow you to drop to liablity now if you want.

Some banks (Household Bank/HSBC in my experience) will allow you to drop to state minimum for loans with balances under $10k. Check with your lender.

[sweeps]

"Full Coverage" is collision + comprehensive + liability as opposed to "Just Liability".

[tifnglen]

Thanks for everyones responses, I dont plan on dropping comp+coll until I get the loan paid off. I still have time to think about this but I am leaning more towards dropping comp and coll...

[InDebtInDC]

"Full Coverage" is collision + comprehensive + liability as opposed to "Just Liability".

What about deductibles and uninsured/underinsured, medical, lost wages, and other line coverages?

[sweeps]

What about deductibles and uninsured/underinsured, medical, lost wages, and other line coverages?

It's just a general term for conversation. Obviously insurance agents and lawyers wouldn't use it. But we knew what OP meant.

[InDebtInDC]

I really don't know what it means. I try as much as possible not to read into anything that's not explictly there.

Article from my insurance carrier of choice:
Articles & Blogs - "Full Coverage" Doesn't Exist

[sweeps]

Insurance companies would never use a term like "full coverage" because if a customer thinks they are fully covered, they won't buy more of their products.