Collision Insurance question

[moneybags]

We bought a car for DD to use when she gets her license. It is an older car, cost $4000. We are debating whether or not to get collision insurance on it. It would cost an additional $200-$250/year for this coverage, with our current deductible of $1000. If she weren't a new teen driver, I wouldn't consider it. Any thoughts?

[creditcardfree]

Well, teens are more likely to be in a crash. I would probably get it if it were me. If you don't get it and the car is totaled you need to buy another car, which most likely would be more than your $1,000 deductible.

Of course, if $4000 is easy to come by for you and your daughter is a very good driver, than maybe not!

[MonkeyMama]

Hardly seems worth it, if you are paying $3k per year for it. + $1k deductible? The crash rate for teens is not 100%. I'd take the gamble that she doesn't total the car. You could possibly come out ahead.

In general, I'd say it depends on your ability to replace the car, with cash. But that would be about equal to your ability to pay the insurance, in this case.

From another standpoint, I have heard, and my insurer did threaten me last time I dropped collission on a car, that if there is an accident, your insurer won't help you with the claim and you could be assigned more fault than otherwise, in an accident. I personally think that is somewhat BS. My only experience has been no-fault accidents - I have collected from others insurers with ease (by myself), many times. I haven't got to test a multi-fault accident though. But regardless, I personally think that is a bit of a scare tactic. But if you aren't very assertive and don't want to deal with insurers, I suppose it could be a plus for the insurance.

[creditcardfree]

From another standpoint, I have heard, and my insurer did threaten me last time I dropped collission on a car, that if there is an accident, your insurer won't help you with the claim and you could be assigned more fault than otherwise, in an accident .

We didn't have collision on a vehicle. My husband crashed into a building when he lost consciousness due to a medical issue. The insurance handled the issue with the building because we had liability, but they did not handle any issues with the car. It was towed from the scene, per police order, and it was our responsibility to pay the impound fees and remove the vehicle from the lot. Our responsibility to pay for repairs...ect.

My point is that if we had collision, the insurance would have handled the impound fees and so forth. It was kind of a pain to deal with as my husband was in the hospital at the same time. Sometimes things are worth paying for. I will never not have collision on a car based on our experience. Sure it may be more costly, but sometimes it is worth it.

[cptacek]

My parents didn't have full coverage on the cars us older kids drove. But after older sister, me, younger sister, younger sister, younger brother, younger sister, younger sister, and younger brother all got in wrecks driving to school, they have it now (for the last three). Although we were driving 30 miles to school on dirt roads.

In other words, I would suggest it. Teen drivers tend to get in wrecks.

[disneysteve]

I believe the rule of thumb, for what that's worth, is to drop collision coverage when the annual cost of the coverage is 10% or more of the car's value. Your car's value is $4,000 so that would suggest not taking the coverage if it costs $400 or more (though I'm not sure how you factor in the deductible).

That said, it also depends on your situation. If the car were to be totaled, are you in a position to go out and replace it with another $4,000 car? If not, I'd take the coverage, at least for a year or so until she has some driving experience under her belt. This really isn't an either-or kind of decision. You can take the coverage now and drop it at any time later when you feel her risk level is reduced.

On the other hand, think about how much money you'd be willing to spend to repair this car and at what point you would actually file a claim. Your deductible is $1,000. Let's say there is $1,200 damage. Would you file a claim to collect $200 and have her insurance rate skyrocket? Probably not. In reality, you might not file a claim unless the repair was going to be another $500-$1,000 beyond the deductible. It that's true, then you are really only taking $2,000 worth of insurance and paying $250/year for it. That seems rather pricey to me.

[disneysteve]

My parents didn't have full coverage on the cars us older kids drove. But after older sister, me, younger sister, younger sister, younger brother, younger sister, younger sister, and younger brother all got in wrecks driving to school, they have it now (for the last three). Although we were driving 30 miles to school on dirt roads.

In other words, I would suggest it. Teen drivers tend to get in wrecks.

You guys must have given your parents full heads of gray hair. Wow! 8 kids and 8 car wrecks.

I've been driving for 30 years without a wreck. My wife has done the same. I know lots and lots of people who did not wreck their cars as teens. In fact, I'd say that the vast majority of them did not. Maybe a little fender bender here or there but nothing that did more than $1,000 worth of damage.

I don't think wrecks are nearly that common.

[cptacek]

The ninth kid just got her learners permit, too I know that that many wrecks is uncommon, but like I said, we drove on dirt/sand roads for 30 miles to and from school. Mine happened because the sun was in my eyes and I didn't see an unmarked T in the road. Lots of people had wrecked at that intersection before, but they had all been drunk, so nothing had ever been done about it. After my wreck, they put up two signs and extended the road into the field on the other side, so if you missed it you would just end up in a wheat field.

[Like2Plan]

I've been driving for 30 years without a wreck. My wife has done the same. I know lots and lots of people who did not wreck their cars as teens. In fact, I'd say that the vast majority of them did not. Maybe a little fender bender here or there but nothing that did more than $1,000 worth of damage.

I don't think wrecks are nearly that common.

Speaking of fender benders--I would be surprised if the repairs costs less than $1,000 even for a fender bender these days.
IIHS midsized sedan bumper test–None rated Good

Most small cars rate Poor in IIHS bumper tests

Young people ages 15-24 represent only 14% of the U.S. population. However, they account for 30% ($19 billion) of the total costs of motor vehicle injuries among males and 28% ($7 billion) of the total costs of motor vehicle injuries among females

link toCDC fact sheer

Teenage drivers account for only 6.4 percent (12.5 million) of the total drivers in the United States, but account for 14 percent of all drivers involved in fatal crashes and 18 percent involved in police-reported crashes.

link to Allstate

the United States, teenagers drive less than all but the oldest people, but their numbers of crashes and crash deaths are disproportionately high. In the United States, the crash rate per mile driven for 16-19 year-olds is 4 times the risk for older drivers. Risk is highest at age 16. In fact, the crash rate per mile driven is twice as high for 16 year-olds as it is for 18-19 year-olds.

Link to Institute for Highway Safery

[Like2Plan]

I believe the rule of thumb, for what that's worth, is to drop collision coverage when the annual cost of the coverage is 10% or more of the car's value. Your car's value is $4,000 so that would suggest not taking the coverage if it costs $400 or more (though I'm not sure how you factor in the deductible).

That said, it also depends on your situation. If the car were to be totaled, are you in a position to go out and replace it with another $4,000 car? If not, I'd take the coverage, at least for a year or so until she has some driving experience under her belt. This really isn't an either-or kind of decision. You can take the coverage now and drop it at any time later when you feel her risk level is reduced.

I agree with this...

[disneysteve]

L2P, I wasn't saying that teen drivers don't get in more accidents than older drivers. I just think that fact is often blown out of proportion. Some people make it sound like every teen is bound to get into an accident and that just isn't true.

[Like2Plan]

L2P, I wasn't saying that teen drivers don't get in more accidents than older drivers. I just think that fact is often blown out of proportion. Some people make it sound like every teen is bound to get into an accident and that just isn't true.

DisneySteve,
I am at an age where most of my peers have teen drivers (or their kids have gone through the teen driving phase)... I don't claim the number is 100%, but it happens far too often for me to believe it is an unusual occurance, either.

[disneysteve]

Of course, when I was a teen, we didn't have cell phones, texting, iPods, GPS units and every other distraction cars have today. I'm sure that hasn't helped matters. The most I did that took my attention off the road was putting the 8-track tape in the player.