Auto insurance question

[ATLien247]

I've been carrying full coverage on my daily commuter car (97 Ford Taurus w/ 105K) ever since I paid it off however long ago. The fair market value for it according to KBB is $3250.

I've been looking for ways to cut down my monthly expenditures, and dropping full coverage in favor of liability coverage came to mind. It'll drop my insurance payments about $40/month if I go with liability coverage.

What kinds of situatiions should I be taking into consideration in deciding whether to do this or not?

I've never been is any major accidents, so I don't know what repair costs would be in the event that they are not severe enough to total the car. So I don't really know if I would want to repair the car or just buy a new one.

Any advice?

 

[Beau]

Who is your agency? Check around, get some quotes before you downgrade.. I just moved from Farmers to AFI, saved me over $60/mo for full coverage.

 

[NutBucket]

I'd dump collision. That's usually the most expensive one especially considering how little the car is worth. Hell, it was $400 a year on my 13 year old Accord.

 

[IHateMyJob2004]

Originally posted by: ATLien247
I've been carrying full coverage on my daily commuter car (97 Ford Taurus w/ 105K) ever since I paid it off however long ago. The fair market value for it according to KBB is $3250.

I've been looking for ways to cut down my monthly expenditures, and dropping full coverage in favor of liability coverage came to mind. It'll drop my insurance payments about $40/month if I go with liability coverage.

What kinds of situatiions should I be taking into consideration in deciding whether to do this or not?

I've never been is any major accidents, so I don't know what repair costs would be in the event that they are not severe enough to total the car. So I don't really know if I would want to repair the car or just buy a new one.

Any advice?

Better idea. have cell phone and/or broadband? Cancel them first if $40 is an issue.

 

[TheLonelyPhoenix]

I have a friend who owns a 83' Mazda and only pays liability. The only consideration you need to have is what you're going to do if you get into a major accident you can't pay repairs for out of pocket. If the car is just a beater and you aren't dependent on it for point A to B transportation, go for it. From the sound of it though, you're gunna be up sh!t's creek for awhile if the car gets totalled, so I'd keep full coverage for as long as that was my only means of transport.

 

[JeffreyLebowski]

Like said above, if this is your only means of transportation do not get rid of full coverage. It's not worth the risk. If you want to save $40, there are many other ways to do this.

 

[Thegonagle]

Figure out whether you can afford an at-fault accident without insurance coverage first. (Can you replace the car with a similar one or put up a good down payment using your savings? If so, then you can probably afford to drop collision and comp. If not, it's probably not the best idea at this point.)

And always shop around whenever your policy is up for renewal.

 

[dullard]

Quick crude math: Lets assume you are fairly typical and thus will need the coverage for some reason or another every ~10 years (accident, crime, or whatever). Cost for 10 years of full coverage: $40*12*10 = $4800. Cost to replace the car yourself: $3250. Take the cheaper of the two options.

Note: this assumes you can at the drop of a hat come up with the one time $3250 payment needed to replace the car. If not, add to that the cost you'll have to pay to get a loan.

Hint: for most people, if the car is worth less than $4000, then they are probably better off dropping the full coverage.

 

[TheLonelyPhoenix]

Originally posted by: dullard
Quick crude math: Lets assume you are fairly typical and thus will need the coverage for some reason or another every ~10 years (accident, crime, or whatever). Cost for 10 years of full coverage: $40*12*10 = $4800. Cost to replace the car yourself: $3250. Take the cheaper of the two options.

Note: this assumes you can at the drop of a hat come up with the one time $3250 payment needed to replace the car. If not, add to that the cost you'll have to pay to get a loan.

I'd sure like to know what <$4000 vehicle you've been driving that lasts 10 years without needing a repair comparable to the value of the car. I'd say 5 years is a more realistic time-frame for your math there.

 

[dullard]

Originally posted by: TheLonelyPhoenix
I'd sure like to know what <$4000 vehicle you've been driving that lasts 10 years without needing a repair comparable to the value of the car. I'd say 5 years is a more realistic time-frame for your math there.

I'd sure like to know what auto insurance covers the cost of repairs. If you have that unusual insurance, then add the cost for that extra coverage into the math as well as the cost of doing the repairs.

As it is, most insurance doesn't cover repairs, and thus the repairs come out of your pocket with either option. Thus I left it out for clarity. I also left out oil changes and gas. Does your insurance cover those as well?

 

[ATLien247]

It isn't my only means of transportation, I have another vehicle (my wife's minivan) that I could use until I figured out what to do with mine. Also, my financial status is such that I could afford to buy a new car right now if I needed to... I just like not having two car payments. And I'll most likely be buying a new car when my wife's is paid off in three years anyway.

I guess I'm trying to figure out if I'm better off in the long run with a smaller monthly payment...

In the event that I do get in an accident, and the car is totalled, having full coverage would mean I get fair market value for my car, correct? That'd be a nice down payment. Conversely, in that same situation, if I only had liability coverage, I would not get anything (unless the accident wasn't my fault).

 

[TheLonelyPhoenix]

Originally posted by: dullard

Originally posted by: TheLonelyPhoenix
I'd sure like to know what <$4000 vehicle you've been driving that lasts 10 years without needing a repair comparable to the value of the car. I'd say 5 years is a more realistic time-frame for your math there.

I'd sure like to know what auto insurance covers the cost of repairs. If you have that unusual insurance, then add the cost for that extra coverage into the math as well as the cost of doing the repairs.

As it is, most insurance doesn't cover repairs, and thus the repairs come out of your pocket with either option. Thus I left it out for clarity. I also left out oil changes and gas. Does your insurance cover those as well?

You are assuming that, if the car is not vandalized, stolen, or in an accident, it will not need to be replaced for 10 years. This is almost certainly not going to be the case.

 

[NutBucket]

Originally posted by: TheLonelyPhoenix

Originally posted by: dullard

Originally posted by: TheLonelyPhoenix
I'd sure like to know what <$4000 vehicle you've been driving that lasts 10 years without needing a repair comparable to the value of the car. I'd say 5 years is a more realistic time-frame for your math there.

I'd sure like to know what auto insurance covers the cost of repairs. If you have that unusual insurance, then add the cost for that extra coverage into the math as well as the cost of doing the repairs.

As it is, most insurance doesn't cover repairs, and thus the repairs come out of your pocket with either option. Thus I left it out for clarity. I also left out oil changes and gas. Does your insurance cover those as well?

You are assuming that, if the car is not vandalized, stolen, or in an accident, it will not need to be replaced for 10 years. This is almost certainly not going to be the case.

Sheesh, I wish my comprehensive/collision was that cheap!

 

[dullard]

Originally posted by: TheLonelyPhoenix
You are assuming that, if the car is not vandalized, stolen, or in an accident, it will not need to be replaced for 10 years. This is almost certainly not going to be the case.

The math doesn't care. To make math easy, you could replace it with another $4000 car. Again nothing changes. For the first X years, don't get the extra coverage, then for the latter 10-X years, don't get the extra coverage. It doesn't matter.

If you do replace it with a much better car after X years, then for the first X years, don't get the extra coverage, and then do get the extra coverage for the latter 10-X years.

The math boils down to this: if your current car is <$4000, then consider dropping comprehensive. If your current car is >$4000, then consider adding comprehensive. The point at which you bought/replaced cars doesn't matter.

 

[Kelemvor]

Could always compare what you pay noe for yoru car to what you'd pay for a new car that's much safer. Then see what monthly payment syou could get and just sell your junked for something nicer that might be actually cheaper to insure.

 

[squeeg22]

You do know that the week you decide to drop collision insurance, you will almost certainly get into an accident. It's a conspiracy by the auto insurance companies, giving you a big fat "I told you so! Don't mess with us."

 

[NutBucket]

Originally posted by: squeeg22
You do know that the week you decide to drop collision insurance, you will almost certainly get into an accident. It's a conspiracy by the auto insurance companies, giving you a big fat "I told you so! Don't mess with us."

Hasn't happened yet!

<-- dropped collision coverage about a year ago. Only one close call since

 

[freebee]

Originally I was going to write about an underwriting comparison based on premiums versus market value. However, without getting too technical, determing proper insurance coverage is about deciding how much risk you are willing to live with.

In large cities, it often is not worth to carry first party coverages greater than 3-4 years, yet from my work in insurance, many people (especially younger people) still pay high premiums for these coverages. Obviously in rural areas, i've seen vipers being insured with astronomical 500/500 bi limits for under 1k a year, and yet here in NYC, a 18 yo driving a civic with 25/50/50 minimal sum, pip, and coll/comp 500 would pay anywhere from 2-4k.

In reference to the OP's post, you are not getting anywhere close to 3250 for a 97 taurus. Salvage would take 10% approx, minus market value adj, minus your deductible (subro-able or not) plus any other fees.


Play with your bi limits, anything over 50/100 is fine. pd50 is sufficient in most cases, bump to 100 in urban areas with any kind of sig. assets. UM/uim stick with the minimums. addt'l pip/obel (for states that have them) are largely useless. Other features such as rental, mechanical, glass coverage, etc. (however coll/comp covg may be required) are up to you. Purchase a personal umbrella policy if you have greater assets (however these may require you maintain certain minimum coverages).

 

[flot]

Originally posted by: freebee
Originally I was going to write about an underwriting comparison based on premiums versus market value. However, without getting too technical, determing proper insurance coverage is about deciding how much risk you are willing to live with.

In large cities, it often is not worth to carry first party coverages greater than 3-4 years, yet from my work in insurance, many people (especially younger people) still pay high premiums for these coverages. Obviously in rural areas, i've seen vipers being insured with astronomical 500/500 bi limits for under 1k a year, and yet here in NYC, a 18 yo driving a civic with 25/50/50 minimal sum, pip, and coll/comp 500 would pay anywhere from 2-4k.

In reference to the OP's post, you are not getting anywhere close to 3250 for a 97 taurus. Salvage would take 10% approx, minus market value adj, minus your deductible (subro-able or not) plus any other fees.


Play with your bi limits, anything over 50/100 is fine. pd50 is sufficient in most cases, bump to 100 in urban areas with any kind of sig. assets. UM/uim stick with the minimums. addt'l pip/obel (for states that have them) are largely useless. Other features such as rental, mechanical, glass coverage, etc. (however coll/comp covg may be required) are up to you. Purchase a personal umbrella policy if you have greater assets (however these may require you maintain certain minimum coverages).

You are obviuosly an insurance agent, since you managed to make your post completely unreadable by the simple act of abbreviating a lot of words which you could have easily spelled out, resulting in a bunch of gibberish instead of a helpful post.

In fact, I'm beginning to think you might be Mr. Farm himself - or perhaps the geico... can you do the robot?

 

[redly]

Seriously, if you want to save some money, get a quote from American Express Insurance link

 

[NutBucket]

Originally posted by: freebee
In reference to the OP's post, you are not getting anywhere close to 3250 for a 97 taurus. Salvage would take 10% approx, minus market value adj, minus your deductible (subro-able or not) plus any other fees.

Another member on here had a car stolen (we have the same insurance company). The settlement was for the market value of the car (ie comparable car on autotrader/similar) minus deductible.