Old car + too much auto insurance.
April 9, 2014 5:31 PM   Subscribe

I'm a dummy. I have a 17-year-old beloved Honda CRV that I cluelessly have been paying too much car insurance on.

It wasn't until a friend mentioned she had a similar car and was only paying $40 a month on car insurance did I realize I was getting ripped off by State Farm. When I called them about it, they gave me some BS that I was under a policy that guaranteed I'd never be dropped from them, hence the additional cost.

My old quote:
Liability insurance: Bodily - $50,000 / $100,000; property - $50,000
Auto Collision: Actual Cash Value - $500 deductible
Auto Comprehensive Insurance: Actual Cash Value - $100 deductible
Towing and labor costs - $50
Rental reimbursement Coverage - Up to $30 each day

I asked them to redo the quote with just the basics.

Liability insurance: Bodily - $50,000 / $100,000; property - $50,000

The revised price is half of what I am paying now.

Do I really need anything more than that for a 17-year-old car that other than a few bumps and dents, runs great and reliably? I commute less than 50 miles a week but do take road trips. It's got just over 160,000 miles on it. My FICO score is decent and in the above average range. I'm guessing in the next 2 or 3 years I'll be in the market for another car, but in the meantime, would this suffice?
posted by HeyAllie to Travel & Transportation (17 answers total) 6 users marked this as a favorite
Sorry, it's Allstate, not State Farm. See, I'm so mad I can't even get their names straight. More info, I have a clean driving record and the only claim I've had in 12 years was a new windshield, which they told me doesn't affect the premium.
posted by HeyAllie at 5:32 PM on April 9, 2014

If tomorrow you had to buy a new car (used beater car), could you ?

It is better for you financially, to self insure against a total loss of a 17 year old car. With a car that old, at some point you will be buying a new car. If you have the money (or the ability to get a car loan) set for that, then you only need liability insurance coverage (insurance to pay for damage to the other guy's car).

However, if you have a total loss of car in an accident tomorrow, and you can't afford to buy (or finance) a new car, and you have no collision insurance to repair or replace your damaged car - then, how screwed will you be with no car?

Personally, I would not pay collision on a 17 year old car. I mean, if you pay $50/mo, in 2 years you have paid $1,200, which is probably close to the total cash value of the car anyway. But then, I have the ability to get myself a new car tomorrow, if I needed too. Do you?
posted by Flood at 5:53 PM on April 9, 2014 [1 favorite]

Here's the thing: it's about what you're risking.

The Blue Book value on a 17-year-old beloved CRV in perfect shape at that mileage is $2,350 (not including any options you've chosen); that means if your car is stolen, you could theoretically replace it for $2,350. In practice probably not.

So it may be beloved to you but it isn't to your insurance company. If it got stolen or totaled (and a car that old, just about any accident will total it), you'd get less than $2,350, and you'd have to subtract $500 from that (your deductible.) So maybe you'd get $1,500. Maybe. How much were you paying for a potential upside that small?

So yes, that's enough coverage; you have liability in case you cause an accident or damage, but if someone walks away with the car or it is totaled, from a cash perspective you're only losing $1,500 or less.
posted by davejay at 5:55 PM on April 9, 2014

Oh, and as Flood says, if you're worried, just self-insure: whatever money you would have paid if you hadn't dropped comprehensive and collision, put that aside each month. If you get up to $1,500 or so, you were better off without comprehensive/collision, and if you don't, you were only worse off by the difference between roughly $1500 and the amount you put away before it happened.
posted by davejay at 5:57 PM on April 9, 2014

I wouldn't maintain collision on a car that old. You will never repair this car after an accident. Any accident worth eating the deductible on will total the car, and you'll probably walk away with less than $2000, if the car is great shape.
posted by COD at 5:58 PM on April 9, 2014 [1 favorite]

I have a 16 year old car that I pay roughly $35/month for and I'd say based on the value of your car (roughly 4k clean retail at NADA) and its age, I don't see what the benefit would be to having higher coverage. If you're in a wreck, a car that age would be unlikely to be repaired, and instead, be considered 'totaled' and the value paid to you to help replace it.

I think liability-only is fine.
posted by stubbehtail at 5:59 PM on April 9, 2014

you'd get less than $2,350, and you'd have to subtract $500 from that (your deductible.) So maybe you'd get $1,500.

This is not actually accurate based on my experience having my car totaled (not my fault) while having coverage with State Farm. I received quite a generous value for my car, plus they accounted for the tax and fees I would have to pay for a new car, plus I eventually recouped the deductible from the insurance of the guy who hit me.
posted by drjimmy11 at 6:05 PM on April 9, 2014

Liability is all you need on a car that age. But I'd worry that your liability insurance looks way low. Maybe it's different in your location (America?). My liability insurance is one million dollars for people and I think it might be the same for property, but I'm not 100% sure. In any case, what if your car catches fire next to a property worth hundreds of thousands of dollars that also catches fire and then has to be completely rebuilt? What if you kill someone who has life insurance for a million dollars? (I'm pretty sure that person's insurance would then come after yours.) What if you accidentally crash into several Porsches at once?
posted by lollusc at 6:20 PM on April 9, 2014

I think this is the right time - past time - to drop collision on this car.

Also, I can definitely see why it's frustrating to have sorta thrown money away, but no insurance company anywhere is going to call you to tell you that your old car is overinsured and that you should consider dropping some coverage.
posted by ftm at 6:20 PM on April 9, 2014

Up the liability, that's way too low. 100k/300k is the min where I live.
There are tons of cars costing more than 50k on the roads now.
posted by TheAdamist at 6:24 PM on April 9, 2014 [2 favorites]

>I was getting ripped off

Just because my dad is an insurance agent, I'll take issue with this characterization. If you walked into your agent and asked this question, he would probably give you the answers you're receiving here. [If you have asked your agent, and your agent said "you totally need all this coverage on your 17-year-old car", then I'll agree with the "ripped off" characterization] Typically, though, just like your cable company will never send you a note saying "We've noticed that your cable box never gets tuned to Showtime. Are you sure you want to keep paying for it?", an insurance company is not going to volunteer which coverages you should drop unless you ask.

You signed up for insurance at some point. Your needs may have changed, but so far as the company is concerned you are a happy customer. If you never asked them about reducing your rates, it doesn't mean they're ripping you off.

>Liability insurance: Bodily - $50,000 / $100,000; property - $50,000

That seems crazy low. I'm in MN, and my BI/PD liability limits are 250K/500K/250K. Imagine you hit and total some guy's brand new Maserati. $50K isn't going to cover that.

Others have discussed the calculus; it's all about risk. With your existing coverage, if you total your car, you'll get $30 a day toward a rental car while you shop for a new car. If that's not worth whatever you pay for it, then drop it. They'll pay up to $50 to tow your car. Again, if that service is not worth the cost, drop it.

I would probably drop everything except comprehensive, just for glass coverage. My carrier's comp comes with 0-deductible glass regardless of comp deductible, so if a truck kicks up a stone and breaks the windshield on my 1998 Ford I get that replaced for "free" [I don't spend a windshield's-worth on the comp coverage]. I don't carry collision on that car because if someone hits it it's done.
posted by chazlarson at 6:32 PM on April 9, 2014 [3 favorites]

Came in to say, go ahead and drop or lower the collision, but heck yes raise that liability and property coverage. Sue, you're a safe driver, but accident happen to anyone, and 50/100K liability and 50K property aren't NEARLY enough...... and I'm not talking about Maseratis, either: look at how many vans and SUVs are priced in the 40k or more range!

And 100k isn't nearly enough liability: that's supposed to cover someone's hospitalization?!? I'd raise that to AT LEAST 250/300K.

Collision is safe-ish to drop: you may love your car, but your insurance company doesn't care about love; in ANY accident, they'd most likely call it totaled and call it a day. Personally I'd keep the rental car coverage, but that's because I've been hit a couple times and it's come in handy --- and remember that even if the OTHER driver is at fault in a crash, it'd take time for their insurance company to pay you, and without that rental coverage you'd be paying out of your own pocket until (and IF!) they do.
posted by easily confused at 2:33 AM on April 10, 2014

I will add to the liability discussion that you should be able to add a $1 million umbrella policy for not much money. I'm paying around $20 a month extra for it, with two teenage drivers in the house. It's not a bad idea, and extends your protection beyond automotive related issues.

Also, I disagree that the insurance company shouldn't be proactively suggesting ways for you to optimize your coverage. It was my State Farm agent's idea to drop collision on my 97 Mazda.
posted by COD at 6:54 AM on April 10, 2014 [1 favorite]

> It was my State Farm agent's idea to drop collision on my 97 Mazda.

Your agent's idea. I would wager that this is an agent who cares about his clientele and wants to provide good service, or you asked your agent about reducing costs. Dad does the same thing for his clients. My point was that i don't think an arbitrary person is going to get a letter from Auto Insurance, Inc. saying the same thing. I know that American Family Insurance has never suggested reducing coverage [aside from generic 'contact your agent to verify your coverage meets your needs'], though my agent has.
posted by chazlarson at 8:18 AM on April 10, 2014

Thanks, everyone. As I said, lesson learned. I will up my liability, drop the collision.

@Chazlarson, I did ask my agent these questions before; I'm pretty sure my annual reviewing of the policy asking "is this liability good enough" and "do I really need this for a 17 year old car?" were pretty straightforward. I regret not checking with others who were in a similar situation as me to see if it was true or not. My fault completely. I'm just sorry that the agent that I had wasn't as proactive or as helpful as your father.
posted by HeyAllie at 10:18 AM on April 10, 2014

Wow. He told you that you needed collision on a 1997 Honda with a straight face? Good riddance to that guy.
posted by chazlarson at 10:50 AM on April 10, 2014

In addition to ample liability limits, make sure you get uninsured/underinsured coverage as well. Liability coverage protects the world from you. UM/UIM protects you from the world.
posted by yclipse at 1:59 PM on April 10, 2014

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