The economics of car ownership and buying new versus used

[Torn Mind]

The main reason to have high liability limits is to have higher amounts uninsured/underinsured insurance and property damage insurance. Comprehensive is worthless on cars with little value and collision is for those who must drive in a more risky manner due to necessity such as work or because they don't want to truly become better drivers.

Comprehensive makes sense if the car will be in locations where theft is more likely, it is not protected from the elements, and whatever other random stuff damages your car is more likely to happen. The value of the car obiously also plays a big role in determining if comprehensive is worth it.

And Full Coverage is not truly full in the sense of everything is covered, but rather the add-on comprehensive and collision insurance is on your policy. By purchasing "only" liability insurance, uninsured/underinsured and property damage comes along with it by default and you cannot totally remove those things from your policy. At least GEICO does not here in MD.

 

[Torn Mind]

This is key.

On a cheap car, its not much about replacing it, as the price of the car might only be 2-3x your deductible. Full coverage protects you from putting someone else (even someone in your own car) in the hospital and getting taken to court for said judgment. To me, a small amount per month is WELL WORTH this piece of mind.

No, it is called uninsured/uninderinsured motorist bodily injury coverage and property damage coverage. Not "Full Coverage". Perhaps you use the term out of convenience but that is not synonymous with "full coverage", where comprehensive and collision are part of the package, no exceptions.

If you are at fault for putting someone in the hospital, your liability limits determine whether you get sued. If the damages exceed your limits, you are potentially open game if their Uninsured/underinsured coverage is not enough.

If they are at fault, you contact their insurance company and demand they pony up the cost. If their limits are too low to fully pay your expense, then your uninsured/underinsured coverage can potentially make up the difference if high enough. If not, then you have to sue.

 

[exar333]

No, it is called uninsured/uninderinsured motorist bodily injury coverage and property damage coverage. Not "Full Coverage". Perhaps you use the term out of convenience but that is not synonymous with "full coverage", where comprehensive and collision are part of the package, no exceptions.

If you are at fault for putting someone in the hospital, your liability limits determine whether you get sued. If the damages exceed your limits, you are potentially open game if their Uninsured/underinsured coverage is not enough.

If they are at fault, you contact their insurance company and demand they pony up the cost. If their limits are too low to fully pay your expense, then your uninsured/underinsured coverage can potentially make up the difference if high enough. If not, then you have to sue.

Don't disagree. Usually it makes sense to get full coverage if you want higher liability limits and/or underinsured coverage (at least in my cases) and the differences are not huge.

I understand some others here don't mind rolling the dice on poor coverage, but personally I think it's smart to have plenty of coverage just in case. It's such a small cost in the overall scheme of things and the alternative could be much, much worse. If someone is sweating an extra $25/month per car, just wait until you get a judgment against you...

 

[Eug]

Don't disagree. Usually it makes sense to get full coverage if you want higher liability limits and/or underinsured coverage (at least in my cases) and the differences are not huge.

I understand some others here don't mind rolling the dice on poor coverage, but personally I think it's smart to have plenty of coverage just in case. It's such a small cost in the overall scheme of things and the alternative could be much, much worse. If someone is sweating an extra $25/month per car, just wait until you get a judgment against you...

You don't need full coverage with high liability limits. In fact, you don't necessarily want full coverage with high liability limits either.

I wouldn't bother with collision on a car worth $4000, but I'd still get $1 million liability bare minimum.

Similarly, comprehensive isn't that interesting to me either. I don't live in hurricane country for example.

Personally I think it's foolish to get less than $1 million liability in North America, but that doesn't in any way imply "full coverage".

EDIT:

For clarity, for my policy from my insurer, the uninsured motorist coverage is included as part of my liability coverage. So yeah, I'm covered for both too.

So bottom line: You do not need "full coverage" if you drive cheap cars. You just want good liability (and uninsured motorist coverage).

If you crash a $4000 car and don't have collision, then you're only out $4000.
If a hurricane drops a tree on your $4000 car and you don't have comprehensive, then you're only out $4000.
If you crash a $4000 car and permanently injure someone and you only have $200000 liability, then you might be out another $300000 because of a $500000 award, with part of your wages garnished for the rest of your life.

 

[Torn Mind]

It will take quite the accident to reach 1 million in damages. And there is the matter of whether the lawyers will actually sue for more if the settlement is enough. 300,000/500,000 will cover quite a few major accidents.

 

[Eug]

It will take quite the accident to reach 1 million in damages. And there is the matter of whether the lawyers will actually sue for more if the settlement is enough. 300,000/500,000 will cover quite a few major accidents.

It wouldn't take that big of an accident to reach $1 million, but even if it did, more than $200000 is commonplace. Over $500000 is less common, but still not infrequent. Furthermore, you don't get $1 million coverage for just $1 million judgements. You get $1 million coverage for judgements over $500000. Around here, going from $1 million to $500000 coverage will only save you about CAD$40-50 per year. That's literally only about US$3-$4 per month.

If you hit someone and paralyze him, that award could be quite high. Lost wages and medical care and what not. What happens if he's 30 years old and made $100000 a year, and suddenly can't work anymore? You get the picture. You could do that with a Honda Fit, or with a Ford F150, and it wouldn't take much.

Hell, a few years back, a young dentist was awarded over CAD$2 million in a lawsuit after a crash just because she had a foot/ankle injury. She was not paralyzed and her brain was still fine. However, the argument was that she could no longer stand to do her job for long periods.

Like I said, I have $3 million in coverage, but that's because I have $1 million on my auto insurance, plus another $2 million in umbrella coverage between my home and auto policies.

 

[monkeydelmagico]

It will take quite the accident to reach 1 million in damages. And there is the matter of whether the lawyers will actually sue for more if the settlement is enough. 300,000/500,000 will cover quite a few major accidents.

Agree with Eug $1mil is pretty much a minimum. It doesn't take much of an accident to reach those kinds of medical costs. Hit a minivan full of fragile leeches and you are gonna pay for life.

 

[Torn Mind]

Not buying it. My mom and sister got in a accident. Settlement initially had around 150000. Tried to sue, but actually lost money and only got 100, 000. Sister got a concussion, mom got spinal injury but did not opt for surgery. Mom's Civic wagon (going straight) got smashed by a Ford Windstar hurrying to make a left and then was redirected into a third vehicle. All that, and barely 6 figures. Plus, everyone in my family drives like a grandma, and in a car that forces one to do so in the Toyota Matrix. I would not ever consider 1 million. I value the money I saved over paper tigers.

 

[Torn Mind]

Agree with Eug $1mil is pretty much a minimum. It doesn't take much of an accident to reach those kinds of medical costs. Hit a minivan full of fragile leeches and you are gonna pay for life.

Ifnyou drive like a maniac, drunk, have a job that requires prompt delivery, or something else that makes you so dangerous behind the wheel that you plow a vehicle to such a state. It is more llikely to plow a pedestrian to death than to damage occupants in one of the safest vehicles on the road.

 

[Eug]

Not buying it. My mom and sister got in a accident. Settlement initially had around 150000. Tried to sue, but actually lost money and only got 100, 000. Sister got a concussion, mom got spinal injury but did not opt for surgery. Mom's Civic wagon (going straight) got smashed by a Ford Windstar hurrying to make a left and then was redirected into a third vehicle. All that, and barely 6 figures. Plus, everyone in my family drives like a grandma, and in a car that forces one to do so in the Toyota Matrix. I would not ever consider 1 million. I value the money I saved over paper tigers.

You're not buying it, but it happens often.

Ifnyou drive like a maniac, drunk, have a job that requires prompt delivery, or something else that makes you so dangerous behind the wheel that you plow a vehicle to such a state. It is more llikely to plow a pedestrian to death than to damage occupants in one of the safest vehicles on the road.

Pedestrians also can sue. Or their families can also sue. In fact, you're probably more likely to paralyze someone going at 50 mph than you are at 100 mph. At 100 mph you'd kill them.

 

[Torn Mind]

You're not buying it, but it happens often.



Pedestrians also can sue. Or their families can also sue. In fact, you're probably more likely to paralyze someone going at 50 mph than you are at 100 mph. At 100 mph you'd kill them.

Even in 30 mph areas, pedestrians die. In College Park. MD, three deaths occurred on the main road going through it, and that subsequently led to a further lowering of the speed limit and a iron fence in the middle of the highway.

You thought I didn't know that their families could not sue? Just because someone is dead does not mean someone else cannot fight for them. This is a red herring anyway to make me look like an idiot and distract from the literal point of my particular sentence.

It does not happen with a large enough probability to hit such maximums.

 

[monkeydelmagico]

Ifnyou drive like a maniac, drunk, have a job that requires prompt delivery, or something else that makes you so dangerous behind the wheel that you plow a vehicle to such a state. It is more llikely to plow a pedestrian to death than to damage occupants in one of the safest vehicles on the road.

So pizza delivery guys should really get more insurance?

 

[Eug]

Even in 30 mph areas, pedestrians die. In College Park. MD, three deaths occurred on the main road going through it, and that subsequently led to a further lowering of the speed limit and a iron fence in the middle of the highway.

You thought I didn't know that their families could not sue? Just because someone is dead does not mean someone else cannot fight for them. This is a red herring anyway to make me look like an idiot and distract from the literal point of my particular sentence.

It does not happen with a large enough probability to hit such maximums.

So basically, you're hoping that if you have an accident you'll luck out and have a lower award. Seems pretty risky, for $40 a year.

 

[slashbinslashbash]

So basically, you're hoping that if you have an accident you'll luck out and have a lower award. Seems pretty risky, for $40 a year.

These headline $Millions awards are headlines for a reason. The person who has to pay up must have been grossly negligent for the victim to receive that kind of award. In a standard car accident scenario (maybe somebody not checking a blind spot, or pulling in front of somebody) there is no way they are going to recover that much money. Driving drunk, the wrong way on a highway off-ramp, at 70MPH, ok maybe.

The awards have to be proportional to the offense. Yes some bad stuff happens sometimes. But a lot of it is truly an accident and unpredictable.

What is truly risky is to not have some kind of disability insurance for YOURSELF if you are the major breadwinner for your family. Which would cover you whether you're in a car accident or you trip and fall on the sidewalk and bust your spine.