What kind of car insurance should I get??

[Obiwan]

Hi Everyone,

I've been reading discussions on this site for a while now, and I've thoroughly enjoyed reading all of your intelligent and well thought-out responses to all of the issues posted here.

I need to get your thoughts on what kind of car insurance I should have. I currently have 3 vehicles, a 2007 Nissan, a 2002 Lexus and a 2002 Infiniti. The Nissan is leased, but the other two are owned outright. In order to save money, I thought about switching the car insurance on the two paid-for vehicles from full coverage to liability-only. Does this make sense or is it too risky to be worth it?

The private party value on KBB is about $12,000 for the lexus and $7,800 for the infiniti. The total 6 month premium is $1,332 for full coverage on the 3 cars with $1,000 deductible.

Any advice would be greatly appreciated!

[sweeps]

According to Liz:

If the annual cost for collision and comprehensive insurance on your car is more than 10% of what you'd get from your insurer, then it's time to consider dropping them.

So:
1. Pull out the amount you're paying just for collision and comprehensive for 6 months for a car, multiply it by 2.
2. Estimate what your insurance company would give you for the car if totalled. Be sure you've subtracted the deductible ($1,000).

If the figure you got in #1 is > 10% of the figure you got in #2, then you should consider dropping collision and comprehensive.

[noppenbd]

Interesting. I did this calculation for my 2 vehicles (insured with USAA) and the number in figure #1 was only 3% of the figure for #2. Seems like a good deal to me!

[sweeps]

Additional note: Be sure you run the numbers for each car individually.

[cooliemae]

The obvious question is: Have you shopped around for better rates?

[fruitbowlk]

When a car is paid off it is recommended that you go to liability insurance. I have liability insurance on my paid for car and also 1,000 deductible.

[noppenbd]

When a car is paid off it is recommended that you go to liability insurance. I have liability insurance on my paid for car and also 1,000 deductible.

It's not clear who is recommending that. Obviously it depends on the cost of the comprehensive/collision. In my case I pay 3% each year of the amount I would receive in a total loss. That means if I file a total loss claim once in 33 years I would come out ahead paying the comprehensive/collision even though the car is paid off. I think that is a fair gamble, especially since I live in an urban area and have street parking only. If I lived in an rural area I might reconsider, but in my case the C/C is a good deal.

[sweeps]

I agree with noppenbd -- whether your car is paid off or not is irrelevant. The question is how much the coll/comp insurance is costing you vs. the value of the car.

[Pitman]

Almost immediately after I paid of my car, in Aug. 2008, I switched to liability. I was paying $3k for the year with full coverage, and I'm under my mother's insurance, mainly because of my young age, and the type of vehicle I have. Now I'm paying $900 for the year, and I couldn't be happier, leaves more room for saving.