How much car insurance do I need?

February 17, 2005 11:59 AM

What kind/ how much car insurance do I need for a 1996 Honda Accord with 175k miles? I'm considering dropping the collision/comprehensive coverage.

My driving record is far from spotless. I've had one recent accident in Septemeber that was my fault, and another probably 4 years ago, so my rates are fairly high. The car is paid off and is in decent condition, but I think if I was in a fairly serious accident that was my fault, I would probably replace it.

posted by electroboy to work & money (9 comments total)

Considering the car is only worth $3500 or so, take the money you would spend on collision/comp coverage and put it in an account. If you get in an accident that's your fault, you have the money to fix or help replace it. If you don't, you just saved a bunch of cash.
posted by knave at 12:06 PM on February 17, 2005

If you keep collision coverage, consider a high deductible, like $1000. That way if you total the car you'll at least get $2500 toward a new one. Put $1000 aside in case you have an accident, and when the value of the car drops below your deductible, cancel the insurance.
posted by kindall at 12:50 PM on February 17, 2005

What kind/ how much car insurance do I need
If you want the minimum, check what your state suggests or has for their insurance laws.
posted by thomcatspike at 12:50 PM on February 17, 2005

If your insurance agent will let you, go for it. Like knave said, save the money and you will come out ahead.
posted by lobstah at 12:51 PM on February 17, 2005

when the value of the car drops below your deductible, cancel the insurance.

That's the strictly safe version, but probably doesn't yield the best expected value, or even a good expected value for reasonable/average cases.

I think it might be cool if there were published, public actuarial advice you could make decisions from (in fact, sometimes I think by law insurance companies should be required to publish their actuarial data / conclusions -- it'd only allow more accuracy in data predictions, and then insurance companies would have to compete on operational efficiency/service which is what they should be doing anyway).

But my guess is that a good rule of thumb would be that when you get within 1-2 years of collision payments of the value of the car, statistically you'd be much better off putting the money away yourself.

Unless you frequently find yourself involved in accidents. But maybe even then, considering the insurance company probably can think of a way to get the money out of you.
posted by weston at 1:05 PM on February 17, 2005

I would 'self-insure' ... carry basic liability insurance on the car, but then put an additional $100 per month away in a savings account or a envelope in a safety deposit box or something so that will act as both a savings account for a new car and an 'oh shit' for when you have an accident and need to replace the car or a part on the car.
posted by SpecialK at 3:48 PM on February 17, 2005

Unless you frequently find yourself involved in accidents. But maybe even then, considering the insurance company probably can think of a way to get the money out of you.

Yup, 2 reported accidents of any type (from fender bender to total destruction, flames, millions of billions of dollars in damage, even felling the CN Tower if you could) within 7 years nets you $7,500 a year basic insurance (liability only) for a 2001 corolla until the first accident is over 7 years old. I found that out the hard way. I believe adding theft/damage insurance was very little, maybe another $500 a year.

If you're gonna have an accident, you may as well make it spectacular -- insurance companies sure don't care.
posted by shepd at 6:04 PM on February 17, 2005

I asked this question recently of my insurance agent. He told me that when the comprehensive-only premium reaches about 1/10 of the value of the car, it's time to consider dropping the coverage to liability only. Since your insurance rate will vary depending on your credit and accident history, YMMV. So if you spend more than $350 per 6 month term on your additional coverage, you might want to drop it.

Of course, this was my agent talking. But I should mention he's extremely good, and I trust his integrity.
posted by Jonasio at 6:50 PM on February 17, 2005

I'm in the middle of a major ass-bite based on collision coverage for a junker car, so I'm just throwing this advice out there: don't bother insuring your crappy car, but if you ever rent a car -- and at some point you probably will -- remember that you don't have collision coverage! And be sure to pay for it on the rental car.

I rented a car, didn't get any of the insurance because I knew I had my own insurance, then I hit somebody and was soon reminded that I wasn't covered for any car I was driving. This is still being worked out, and it's causing me major freakouts. (My liability there may be limited to $1000 but there was more than $20000 damage to the other two cars which adds to the boo hoo hoo and I haven't really sorted it all out).

(I didn't learn that I was covered by my credit card until past their claim filing deadline -- I haven't pursued that.)
posted by xueexueg at 8:44 PM on February 17, 2005