Thanks!

The damage was over $3,500!! Freak accident? Yes, but nevertheless it happened & it was expensive. If you're comfortable with either paying a large repair bill or replacing the car if should be totalled...then drop the collision coverage. If a $3,500 bill gives you the shudders...probably best to keep the coverage.

/tricia

It's true that you can easily sustain $3,000 in damages, but if your car is only worth $1,500, they'll just write you a check for $1,500.

I drive old cars. Don't cost much. If they were totalled .. the insurance co. wouldn't pay much.

I haven't carried collision insurance for years.

Bought a 19-year-old Mazda 323, standard tranny, good shape, a year and a half ago, $2,500.

Had an "incident" that includes appearing that I ran a red light, just about exactly a year ago. A vehicle crunched my rear wheel, driver's side, so that it tracked crookedly.

Felt that it was likely that the vehicle has a substantial number of good kilometres in it, still.

And it costs a lot of precious energy, including substantial increases in pollutants and global warming, to build a new vehicle.

Fixed the old one - cost several hundred more than I'd paid. Plus about $200. towing fee (that I'd have had to have paid, in any case).

I felt that the extra fee, that would involve only a small amount of fabricated goods, but quite a lot of labour, was largely a contribution to reducing energy use, plus warming and pollution.

It would have made more sense to have gone out to buy another $2,500. car (but not hugely so, it seems to me). But, whether I bought another or repaired mine ... I more or less paid for two cars in one year.

Another issue that no one has mentioned ... if you plan to fix your own car ... or scrap it and run around looking for a replacement ... while going to work and doing other necessary tasks ... how are you travelling?

Bicycle?

Thumb?

Sticking a gun/knife in (as-of-that-moment former) friend's ribs to require him/her to drive you around?

Rental car?

Whichever you choose ... you pay for that, as well.

If you choose to repair ... and part way through it takes a while to source a part (which may happen somewhat more frequently with foreign-built cars ... and somewhat more freqently if you insist on using new parts) ... your vehicle may be unavailable for a few weeks.

Using a rental? Additional costs.

ole joyful

How much in "Emergency Fund"?

What percentage of your total current income needs to go for pretty well essential stuff? Is a fairly substantial portion of your current income "discretionary"?

How secure is your employment? Is there a second income? How secure is that?

If your job should happen to evaporate ... what possibility of finding comparable employment (income, that is)? How soon?

How many kids ya gotta help eddicate (or self/partner at full cost) ... and how many years from now?

What if, being part of a family, one partner becomes incapacitated (or dies)? Presence or absence of dependents a major factor.

Parents to possibly need support/care for? How soon?

(How many dogs/cats to support?)

All of these, plus other stuff, as part of one's total financial picture, may affect all aspects of it (especially if one is living fairly close to the line).

Don't you think?

If you could go buy a house and come close to paying cash for it ... no problem ... agreed?

ole joyful ... personal financial advisor for over 20 years

P.S. A substantial financial cushion = financial freedom.

No cushion = next to no freedom.

o j

Are you sure about that? My MIL just had a car accident that was her fault and for which she was ticketed, and the insurance company wrote the check for the value of her car, which was totalled.

When I ran the red light - I having been found at fault - no cheques. No rental while mine was in the shop, either.

Since this is a no-fault area, and if I'm considered not at fault, as my insurance company writes my cheque, they should charge a low collision fee when they know that my car, that they might need to replace, is a cheapie.

I wonder whether anyone has pointed out to them that advantage that they enjoy? And that they should share with us frugal guys that drive cheapie cars?

Enjoy your privilege of being able to drive.

ole joyful

Add up the cost of the deductible plus the cost of the comp and collision coverage for two years. If the cost of the insurance is more than half the value of the car, drop it to liability.

Although insurance is mandatory in every state, not everyone has it. You may want to carry comprehensive and uninsured motorist property damage (if it's available in your state) in place of the collision. It's generally a better rate. You're then covered for anything that is NOT your fault.

drop the coverage when you can self insure for the value of your car. all insurance companies pay value of the car or repair which ever is LESS minus your deductible. if you can afford this drop it, if not keep the coverage.

Example
Car Value: $2000
Damage from accident: $3000
insurance pays: $2000 (value < repair)

"No-fault" has to do with medical payments not property damage. in no-fault states your ins pays for your medical bills regardless of who is at fault. this is to reduce lawsuits.

if you do not have collision cov the ins does not pay your car damage. the liability portion of the policy never pays for your damage.

fyi: i am an ex claims guy.

The insurance company (State Farm) paid me replacement value of the car including sales tax, minus my $500. deductable. They wrote me a check for over $5,800. So in my case I was glad I kept the collision coverage.

So cosider how much the coverage is costing you a year. Ask your insurance company how it figures out payment in case the car is totaled or in an accident.

A 5-10k loss is alot harder for someone living paycheck to paycheck with little savings, than someone frugal with a postive cash flow and 50k in liquid savings. You can also imagine the frugal guy would save the additional money from no insurance payment, while the less frugal person would add it to disposable income. You just need figure which guy you are?

I had an accident that caused $4000 damage to my car (which was worth about $6000 and paid-for). No collision coverage = $4000 instant credit card debt to pay for repairs.

Not having collision coverage was a stupid gamble. I lost.

You have to consider what you have paid in premiums over the years for collision coverage. I bet that, assuming you have owned this or any car about 10 years, you paid almost $4000 for this coverage, and the money wasn't being saved by you and therefore not collecting interest. Not knowing the details of your specific situation, it is hard to crunch the numbers.

If you can handle the risk, get rid of collision when the car turns 7 yrs old. Othewise you are paying too high of a rate.

The average person who has insurance loses. Insurance companies call that profit.

My reasoning:
1. I've been driving over 20 years with no tickets and no accidents. I'm low risk.
2. I bike to work, annual mileage is very low so even less risk.
3. I have several times the value of the vehicle available in a liquid emergency account, so I can afford the loss if I have to.

YMMV.

Also be careful out there with all these wild statements about fault and insurance. The OP is in a no-fault state like Michigan (where I live). In no fault, if you want coverage you buy it. If you do not carry C&C coverage and your car is totalled through another drivers fault, their insurance will not pay you more than the standard deduction ($500) for your loss.

Thinking back to the numbers I crunched at the time, I remember having dropped collision about three years before my accident, saving about $800 each year. So I saved $2400 total in premiums.

But having to put $4000 on a credit card to fix the car was far more difficult and upsetting than paying those premiums would have been. It took me a year to pay it off, writing HUGE checks each month. I think the interest ended up being something like $600 total. And paying off that debt as quickly as possible set back my home remodeling/moving plans by a whole year.

I did sell the car a few years later for $4500 (Jeep Grand Wagoneer, the last year they made the old style), so maybe I sort of got some of the money back then. Although I paid $10,000 for it initially. Cars are expensive!!

I've got collision NOW, though. Learned my lesson.