Could you explain your guideline of 5-8% of bluebook value as a reasonable price to pay for comprehensive/collision insurance? What have you based that figure on?

Thanks!

Our country definately overinsures.

If you can afford to replace your car it is almost never a good idea to pay for collision and comprehensive (unless you plan to comit fraud and wreck your car purposefully). The cases where it is a good idea is where the insurance company has somehow mis-rated you.

Obviously if you are leasing/financing you should have c&c, the assumption being you leased because you couldn’t afford to buy, and by definition need the insurance (the exception here is if you recieved some special financing terms, which should really be a reduction in the price, the problem is the financing company will probably make you get c&c)

That said, I’d offer this rule of thumb to those that don’t have a car loan and can absorb a sizable loss through an established “emergency fund.” If the cost of comp/coll coverage is more than 5-8% of your car’s blue book value, consider dropping the coverages. I prefer the % approach rather than using the vehicle age. Obviously, the percentages should vary based upon where you live and your own driving habits/skills.

Sadhu – when you bought the Acura, comp/coll was 5.7% of the purchase price (prob. the blue book value) and the Corolla comp/coll was 6.25% so I think your decisions were reasonable, though not clear cut. As vehicles age, the decision becomes easier.

I re-read what I wrote, you didn’t miss anything, I just wasn’t clear that the woman in the Durango was at fault, her insurance recognized that, and I was paid.

Assuming the car’s value was $10K by 2 years later, IF you had insurance they would have replaced that $10K minus the $1000 deductible, so a payout of $9000. So you saved $2000 over 2 years but you lost out on the $9000 insurance payout, right?

What am I missing here?

Insurance is for that one bad day when things go wrong (with you or with someone else) and if it costs a few extra bucks to bail you out of that one day then it shouldn’t be much of a bother.

I’d like to drop some coverage for my DH’s car – it’s a ‘98 Taurus with over 125K miles on it. I think it’s worth maybe just a few thousand. Everyone says to keep all the coverages you can but I’m starting to think why bother – if we get a $1k deductible when the can is only worth maybe $3K.