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[FONT="Franklin Gothic Medium"]I recently paid off my vehicle. The trade-in value is around $7000.
Should I continue to have full coverage on it? I'm not sure how to figure this.
Thank you.[/FONT]
The root question is if you lost your car tomorrow, would you be able to replace it without an insurance payout? Or would that seriously hurt you financially?
But if you do some googling you can find some advice about 10% rules and such. Need to know what the coverage is costing you, deductibles, etc.
If you wreck, can you buy another car out of pocket, and not worry about it? If so, then drop collision, and pocket the savings. OTOH, if it was a serious financial burden, keep it.
In the end it's a risk/reward analysis. You "gamble" that you won't be in a wreck, but you "hope" that the savings will put you ahead in the end. The numbers for everyone is different.
This summer I will be tempted to drop collision on one of my vehicles. Its value will have dipped to $5k I think. If it has gone below that I might drop, if collision was $500/year. My reasoning being, we plan to own for another 5 years, and it'll be worth maybe $2k when done. That'll be $2,500 in savings on a car that right now we wouldn't fix cosmetic issues as of right now. Let alone then. It's a gamble but going on past data, we've never been at-fault in 15 years. It seems a safe gamble.
Now, if collision was $100/year I'd keep. Not sure I have a formula but these numbers "feel good" to me.
I have found it makes sense for me personally to cut it off when the car is worth about $5,000. Other people have different levels of acceptable risk and cost.
You can also increase your deductible to get the premium cost down.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Comprehensive covers things like broken windshield, or theft. If someone steals your car, and no comprehensive, you are out that $7,000. It's not a big cost anyway, if trying to save money increase the deductible on collision to what you can afford out of pocket if it gets wrecked.
[FONT="Franklin Gothic Medium"]LOL! Thank you all for your help. I may raise the deductible to $1000. That would save me $185 a year, which isn't much but it's a start.[/FONT]
I recently paid off my vehicle. The trade-in value is around $7000.
Should I continue to have full coverage on it? I'm not sure how to figure this.
Thank you.
A couple questions:
1. Do you have more than $7,000 in cash on hand?
2. Are you willing to happily spend it on another car, if your current car is totaled?
In my 40 years of driving, I have always paid cash for older cars, and never carried comp or collision. It has saved me a lot of money because I've never had a claim. But it certainly is a risk.
When one major repair, body or mechanical will cost half the value of the car.
We do need to keep in mind that, if a repair costs $3500, the insurance company doesn't just cut you a check for the amount. They bicker and haggle, consider the deductible, and end up paying out about $2000 of the $3500 repair.
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