- quote -

The trade-in value is the wholesale value, or at least pretty close to
it.

Dave

Yes, you are correct. I guess I meant both comprehensive and collision.

The posts here were food for thought. I guess the question to answer is
that if the car was totaled or had major damage, how much would I want
to shell out to fix it? I could just junk it and buy a new car.


Matt

- quote -

Bucky wrote:
- quote -

"Dave" <dave_and_darla[at]Juno.com> wrote in message
news:1108043943.578779.3670[at]f14g2000cwb.googlegroups.com...
- quote -

The rule of thumb that I've heard is to drop it when the deductible is more
than 10% of the blue book value. So you're getting close.

Leigh

Dave wrote:
- quote -

That's cool, where do you find the wholesale value at edmunds? I've
only seen trade-in, fair market, dealer retail values.

Matthew Johnson wrote:
- quote -

Did you mean collision coverage instead of comprehensive? Comprehensive
is usually a pretty small portion of the premium. For me, my collision
is 6 times more than my comprehensive coverage (and both are at the max
$1000 deductible). I will eventually drop collision as the value of my
car decreases, but I don't think I'll ever drop my comprehensive. It
only costs me $26/6 mos, and getting a car stolen would be pretty
catastrophic.

Matthew Johnson wrote:
- quote -

I don't know of any rule of thumb, but here are some things to think
about.

Almost all insurance companies will jack up your rates for 3-5 years
after you have the nerve to actually make a claim, which means that in
addition to deductible there is, in effect, a hidden deductible in the
form of higher premiums for a number of years. Also, the most an
insurance company will pay on a comprehensive claim is the market value
of the car. So here is how you calculate the total you could possibly
recover under your comprehensive coverage:

Max payout = Market value of car - stated deductible - (premium
increase for claim * years of increase)

Then divide your max payout amount by your annual premium; that gives
you how many years of premium paying it would take to reach the
break-even point. I did the calculations for my 1991 Mazda and found
that I would pay more in premiums over 5 years than I could possible
recover even if the car was totaled.

In the long long term, insurance is always a bad deal financially. The
insurance companies set the insurance rates so they can pay all claims
plus pay for administrative costs plus make a profit, which means that
on average drivers like you driving cars like yours make annual
comprehensive claims totalling substantially less than you are paying
annually for comprehensive coverage. This means that if you could live
forever, and drive the same car forever, you would end up spending less
fixing comprehensive damage than you are now paying for comprehensive
coverage.

So, the only time insurance makes sense to me is when the highest
possible covered loss would derail my overall financial plan. I carry
insurance to cover risks that could threaten my home or my retirement
savings, but if I could write a check to pay for the damage without
breaking a sweat I won't carry insurance to cover the risk. This
"no-sweat" point is different for every individual, and it depends on
the overall state of your finances and your personal aversion to
writing big checks. Some people see writing a big check to cover damage
or loss as a defeat; I see it as just part of the game of life.

All that being said, I carry comprehensive on my paid-for 2005 Jetta
because I would be psychologically distressed at writing a $20K check.
I don't carry comprehensive or collision on my 1991 Mazda because I
could write a check for $3K without breaking a sweat, and I just have
to go five years without a claim to break even.

Thanks,

Andy

According to Edmunds.com, the wholesale value of your car is about
$11,000 (plus adjustments for optional equipment). This represents the
maximum insurance payout you could get if, e.g., your car is totalled
by a covered event. The question you have to answer is if you would
rather write out the check for the comprehensive coverage for sure or
take the risk that you might have to write out a check for $11,000 to
replace your vehicle. For example, if writing that $11,000 check would
put you in dire straits, then you should pay for the insurance. If you
could handle it relatively painlessly, then you could drop the
insurance and effectively self-insure.

I always paid cash for cars and carried high deductibles on both
collision and comprehensive. I then dropped both coverages completely
when my car was about 6 years old. I usually kept a car about 10 years,
so I had several years of lower insurance premiums.

Dave

My 2000 BMW 323i now has 133,000 miles. Yes, I know, I now would do
something very different in my choice of cars.

Anyways, is it worth still having comprehensive coverage? We have a
$1000 deductible as it is.

What is a good rule of thumb on when to change coverage?


Matt