Do you keep full insurance coverage on your paid-off car?

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alohabear
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Do you keep full insurance coverage on your paid-off car?

Postby alohabear » Wed Nov 28, 2012 12:03 pm

Or did you reduce your coverage to liability only to save money? Why factors did you consider in your choice?

Northern light
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Re: Do you keep full insurance coverage on your paid-off car

Postby Northern light » Wed Nov 28, 2012 12:39 pm

If it is payed off or not is not a factor for me. If I had $100 million I might (I really would´nt) buy a car for $300.000, but would not insure it since I can afford replacing it, or fix "a dent".

As of toady I have a car worth about $9.000, payed off, fully insured because even if we could afford to replace it, that would wipe out too much of our emergency fund. That insuranse is only some $58 per month is also a factor (cheap).

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Re: Do you keep full insurance coverage on your paid-off car

Postby alohabear » Wed Nov 28, 2012 1:08 pm

Northern Light,
Thank you for your answer. Good point about how replacing the car would wipe out too much of your E-fund.

Most states in the US require only liability coverage on a car; however, if there is a lien on the car, the lien carrier often requires full coverage. This is why I specified "paid off" in the original question.

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Re: Do you keep full insurance coverage on your paid-off car

Postby DoingHomework » Wed Nov 28, 2012 1:18 pm

I tend to carry full coverage for at least a few years but I also get very high deductibles, at least $1000. If you look at your insurance premium you will probably find that the comprehensive and collision coverage is cheap. It's the liability part that makes up the biggest share. So, basically you don't save that much by dropping the coverage entirely as opposed to increasing the deductible.

alohabear
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Re: Do you keep full insurance coverage on your paid-off car

Postby alohabear » Wed Nov 28, 2012 1:45 pm

DoingHomework wrote:So, basically you don't save that much by dropping the coverage entirely as opposed to increasing the deductible.


I'm finding the opposite is the case for me. If I drop to liability only, I save $445/year. If I up my deductibles to $1k from $500, I save $37/year.

ssarah
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Re: Do you keep full insurance coverage on your paid-off car

Postby ssarah » Wed Nov 28, 2012 2:45 pm

I would base the decision on what the car is worth. My husband's truck is worth $2000... not really worth insuring. We had a paid off car worth around $8000 for a long time and it was insured because I wasn't prepared to drop $8000 if I wrecked it.

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Re: Do you keep full insurance coverage on your paid-off car

Postby alohabear » Wed Nov 28, 2012 3:01 pm

Thanks, Ssarah! That's a really great way to look at it, and it's helped me make up my mind. The KBB value of the car is ~$11k...totally not prepared to drop that much cash to replace it. I think I'll go to plan B: see if I can find a cheaper rate for the same coverage, and then see if my company will match it.

nelson
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Re: Do you keep full insurance coverage on your paid-off car

Postby nelson » Wed Nov 28, 2012 10:22 pm

Nope. Liability yes. Comprehensive no. The reason is twofold. One, if I get in a wreck and it's someone else's fault, their liability insurance should cover me. Two, and this one is probably more important, the insurance company won't pay much even if it is my fault. Remember, they aren't going to buy you a new car. They're going to pay just enough, assuming it's totaled, to get an equivalent used car. If you can go a year without crashing, that pays for a new used car right there with the money you saved on premiums. Did I mention I drive a cheap car?

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Re: Do you keep full insurance coverage on your paid-off car

Postby stannius » Thu Nov 29, 2012 8:59 am

nelson wrote:They're going to pay just enough, assuming it's totaled, to get an equivalent used car. If you can go a year without crashing, that pays for a new used car right there with the money you saved on premiums. Did I mention I drive a cheap car?


No duh, if you drive a $500 car, it's not going to be worth insuring. :p

Nevertheless, I echo others... My household owns two vehicles. Both have the same liability coverage. The 2010 vehicle is covered with collision and comprehensive; the 1999 vehicle has neither.

catchingup
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Re: Do you keep full insurance coverage on your paid-off car

Postby catchingup » Thu Nov 29, 2012 11:18 am

I like the liability/uninsured driver combo - you aren't covered if a tree falls on your car or you drive into a ditch, but if someone hits and runs your parked car (been there) or gives you a fake insurance card (done that) the repairs are covered. And by "done that" I meant that I received the fake insurance card, not that I gave it. Uninsured was definitely cheaper than comprehensive.

And for me, dropping comprehensive would have a much larger effect than raising my deductible, I think I'd save maybe $40/year if I added $500 to the deductible. I seem to get hit by uninsured drivers about once every 3 years with enough damage to file a claim, so keeping the lower deductible has definitely been worth it.

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Re: Do you keep full insurance coverage on your paid-off car

Postby DoingHomework » Thu Nov 29, 2012 2:30 pm

alohabear wrote:
DoingHomework wrote:So, basically you don't save that much by dropping the coverage entirely as opposed to increasing the deductible.


I'm finding the opposite is the case for me. If I drop to liability only, I save $445/year. If I up my deductibles to $1k from $500, I save $37/year.



Really? That's very odd. I am on a business trip right now but I can post my insurance rates when I get home. Overall they are similar to yours but most is in liability.

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Re: Do you keep full insurance coverage on your paid-off car

Postby DoingHomework » Thu Nov 29, 2012 2:35 pm

nelson wrote:Nope. Liability yes. Comprehensive no. The reason is twofold. One, if I get in a wreck and it's someone else's fault, their liability insurance should cover me. Two, and this one is probably more important, the insurance company won't pay much even if it is my fault. Remember, they aren't going to buy you a new car. They're going to pay just enough, assuming it's totaled, to get an equivalent used car. If you can go a year without crashing, that pays for a new used car right there with the money you saved on premiums. Did I mention I drive a cheap car?


This is only partly true.

If you are in a wreck and it's the other guy's fault, you have to worry about whether he is adequately insured or insured at all. Those are your underinsured and uninsured coverages.

Comprehensive also covers various losses besides a wreck. If your laptop is stolen from your $500 car it might be covered for example.

I did not carry anything but liability on my old beater pickup. But really, everyone should shop wisely and only cover the risks that you can't afford to cover on your own.

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Re: Do you keep full insurance coverage on your paid-off car

Postby hstone » Fri Nov 30, 2012 3:45 am

It's best to keep full insurance coverage on your vehicle regardless if it's paid or not. Your agent should be calculating this cost for depreciation value as well, you would have to find out from your agent how much difference that will make on the premium, this varies sometimes- and dependent on the current value of your car.
It seems kind of odd, when a car is appraised, there also seems to a lot of difference in car that is totaled in an accident and one that is being sold at a dealership..and the current value of your car because it is paid off..go figure.

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Re: Do you keep full insurance coverage on your paid-off car

Postby josetann » Fri Nov 30, 2012 6:50 pm

I only want the bare minimum to keep me legal. Liability only, huge deductible. Right now I don't even have separate insurance, because the legal minimum is part of the car registration fees (personally, I like this setup...though if we had more than two vehicles it'd end up costing us more). The money I save in insurance fees more than pays for the times when I wish I had better coverage. But that's just me.

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Re: Do you keep full insurance coverage on your paid-off car

Postby Justus » Fri Nov 30, 2012 7:55 pm

hstone wrote:It's best to keep full insurance coverage on your vehicle regardless if it's paid or not.


Why?


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