Hi all

My renewal insurance policy comes into effect at the end of this month. I have a 98 Nissan Altima with roughly 55,000 miles on it. I live in NY and have to pay my policy every 6 months. My current policy is full coverage for $1200 for 6 months. My comprehensive and collision are about $800 every six months and the rest is liability. I called my insurance company today to figure out other ways to lower my premiums. I already have a $500 deductible, because $1000 is too much because I live paycheck by paycheck. The representative suggested that since I have owned my car for the last 11 months now (bank doesn't have a lien on it) that I could drop the collision and comprehensive because the car is 7-10 years old. She did a price quote with just liability and it would be only $477 vs. $1200.

I am trying to figure out the best thing to do. I have been to NADA, KBB and Edmunds to access the value of my car and I am not sure which one to use because they all have different car values. There are trade in values, private party, and dealer prices. My car ranges from $2500-$5000. Which company is more accurate and which values do you use - trade in, private party, dealer?

There is a formula where they say that once your annual cost for collision and comprehensive insurance on the car is more than 10% dropping coverage should be considered.

What do you think? What's your experience?

I was having this same dilemma a few months ago. One of my trucks is getting older and probably not worth keeping full coverage on any longer. But I couldn't make my mind up.
I asked my agent for a ballpark figure on what they'd reimburse me if it were destroyed. Sure enough collision & comp weren't worth it. I was basically paying $750/year for the promise of a $1,500 check.
(I have $1K deductible as I'm not going to file a claim for less than that anyway)
You might want to ask your agent his/her opinion of your car's value.

I just ran it through KBB, the ballpark value the agent quoted me was pretty close to KBB's "private party" value. YMMV of course.

You might want to consider keeping full coverage through the winter months when theres snow and ice, and removing it for spring summer and fall. Snow and ice come back around next year and put the full coverage back on for the winter.

One thing you should be very careful about- you said that your Comp and Collision cost $800 and you'd save $733 (1200-477) if you drop them. Make sure that the savings really is that much. I "did the math" on a 6-year old car and figured I'd save the cost of the Comp and Collision that I was paying at the time. Dropping them put me into a different "rating tier"- the reason being that people who carried Liability only were a higher risk and thus their Liability coverage should cost more. (I'm in the insurance business and this didn't make sense to me- I'd think that people who drop Comp and Collision are more careful drivers, but what do I know?) I did save money but it was a few hundred less per year that I'd hoped.

You should also think about what you'd do if your car were totalled and you didn't have insurance. Would the insurance payment make the difference between being able to go out and get another car or having no way to afford a replacement? Or could you find a way to buy another car without it?

One thing you could do is take the savings and put it in a savings account each month so that you have a replacement fund if/when you need to replace the car.

do you have to keep full coverage on autos to maintain an umbrella policy?

As a general rule, when a vehicle gets in the $2000-$2500 range according to KBB I drop the comp & collision. Some things to consider, though...

- Can you afford to replace it if it does get wrecked? You're basically gambling that nothing will happen.

- If something does happen, what will you replace it with? Another 7-10 yr old car worth $2000-$2500? Or, would you buy newer and more expensive for the expected additional reliability and/or length of service?

ETA: Of course, an insurance payout wouldn't pay for the newer and more expensive car, but it would make a down payment.

If you are talking about a personal liability policy (umbrella) here in Indiana the answer is no. You would have to check state to state for other answers as it varies.

Have you shopped around for different companies first?
Rates vary from company to company. This would be my first money saving attempt.
Geico was hundreds cheaper a year then my local guy.

saladdin

No. Umbrella policies cover liability only and thus you do have to maintain specified liability limits- but they won't cover damage to your car. Damage you cause to someone else's car is covered by Property Damage Liability, one of the coverages mandated by most states. Umbrella coverage attaches above that. (Verify with your insurance agent but I'm 99% sure.)

IIRC our policy requires a certain level of auto coverage and not just more liability.

I asked my father in law the same question and he suggested that I look around. He even suggested that I ask another insurance company as a way of getting a "second opinion" about dropping coverage like my current insurance company suggests.

I would like to shop around, but I am concerned that all of those inquiries will hurt my credit report. I was received my Ch7 discharge almost 18 months ago and don't want any unnecessary blemishes. I wonder if I had my CR pulled for the purpose of looking for insurance (say 5 times) would it count as 1 inquiry if its done in a certain amount of days, like it would when shopping for car financing or a mortgage?

This company has only reduced my insurance by $86 over the last 6 months due to being "a loyal customer " for the last 3 years. Ha!

I will look for a defensive course class to take so that i can get 10% off. My certificate expired last year.

Definitely a question to ask your agent. When I dropped my Physical Damage I had Umbrella and the agent didn't say anything. This was NJ and I also carried plenty of Personal Injury Protection- I agree you can't drop that, either.

One more point for the OP- make sure the companies giving you quotes are quoting exactly the same coverages- deductibles, etc. and also Uninsured Motorists. The latter should be relatively cheap. The idea is that if someone without insurance causes an accident, this coverage will pay what their insurance would have. Unfirtunately, there are a lot of irresponsible drivers out there who don't carry insurance at all. You want to make sure they're not lowballing the quote by excluding UM or increasing deductibles.

Who cares? If you are not even 2 years out of BK then you will not be getting a car/house loan anyway. So what if you take a few point hit? Your score is in the crapper anyway. Besides, I have never had an insurance company do a hard pull. Do research on what companies do a soft vs. hard if you are so worried about a point or two.

Saving money so I can live/invest/save/eat is more important then some stupid FICO score.


saladdin

I concur.

we shopped around almost two years ago and found Amica was much cheaper for more coverage for us than GEICO. and there were no hard inqs. the companies that did use credit pulled soft inqs.

I care somewhat about my scores because I am looking to move to another apt soon and some landlords do credit checks and some would like to see at least a decent score (600+) before they will rent to you. That's why I'd like to watch how my inqs appear on my CR's.

but 99% of insurance inqs are not the kind of inqs that damage your credit. they are "soft" inqs.

FYI when I shopped around for car insurance quotes, GEICO, State Farm, Progressive, esurance.com, All State, AIG, American Family, and AAA all did soft pulls. A lot of them showed up as "Choicepoint." I'm definitely gonna add Amica to my list next time I shop around.

how about you learn to drive really well and keep liability insurance... i have had that on my car for the past two years. unless you drive a really nice car.

I have a 2000 impala, not a luxury car but i tend to keep it til it goes to pieces.

"how about you learn to drive really well and keep liability insurance"

What?

So by driving really well you can magically stop people running red lights and hitting you or control mother nature and stop hail damage?

OP,
Again I suggest you research soft pulls vs. hard pulls. You are making a mountain out of a mole hill.
You have full coverage on a 10 year old car and are living pay check to pay check.

What does your local want ads show for people trying to sell your model car?

saladdin

If someone hits you, their insurance pays for damages. Thats how insurance works.

I doubt it's worth having anything more than liability on the car you have right now...

You have a $1000 deductible? lol. you will never get to the point that your insurance co pays for hail damage unless a piece of hail the size of a semi lands on your car.

Sorry If I seem rude, but If I was in your shoes I would go with $500 deductible and liability insurance.

If you live in a place where tough storms hit, you might want to get some additional coverage. But the types of storms I get here aren't tornadoes i.e I just had a storm where I live, and I live on a hill, didn't park next to trees, and I knew that I didn't HAVE to drive, so I lived through it when people were getting car wrecked and having trees fall on their cars.

Just drive smart, if it's raining follow the front cars trails, invest in some triple tred assurance tires and take a class in physics and the chances of you causing damage to your own car or someone elses will go down greatly. If you do cause damage to your own car, well.... lesson learned and I hope can live with it.

if you can't then pay a premium.

As smart as you think you are (the physics expert that you are), I would think you could tell the difference between posters.


saladdin

way to understand that the first part of the reply was for you

Does anybody consciously drive wrecklessly because they have comp & collision insurance?

Not in no fault states. If you don't have full coverage, you'll get $500 or so out of the other drivers insurance.

Not to mention if they do a hit and run.

So Im guessing everyone else is agreeing you should pay full coverage w/ $1000 deductible on your 98 Nissan Altima.

And only I think thats crazy.

I'll just let you know that I drive 2000 Impala with 58K miles on it, live in San Francisco Metropolitan Area and have liability insurance with AAA.

Just to clear things up I have a $500 deductible on my 98 Altima with a little over 55,000 miles on it, which I guess is why when I use websites to access the value of my car its more than a car with more miles. My 6 month renewal is $1200 for full coverage.

To the other posters I live in NYC where I've never seen hail that bad to possibly damage my car, or a hurricane to smash a tree into my car or a tornado to suck it up. Theft is more of a possibility, although I have been fortunate not to have that happen - parked on the street at night.

I have 22 more days to decide what to do. The renewal policy kicks in at 12:01 January 29. I will keep researching.

"To the other posters I live in NYC where I've never seen hail that bad to possibly damage my car, or a hurricane to smash a tree into my car or a tornado to suck it up."

Then you are throwing money away for no good reason. That is exactly the coverage you are paying such a premium for.


saladdin

I believe this would have to be a personal decision for the OP. You would have to evaluate the value of the car. The potential for loss. And your ability to replace the vehicle. I would also factor in the Condition of the car.

In NYC, I would guess the odds of your car stolen is about the same as ME getting stuck in Snow here in Minnesnowta. What would it cost to get a car in relatively the same condition as your current car? What would your insurance payout?

You are currently paying $2400 / year on a car that's worth $5000 at best??? OUCH

PS ... what numbers to follow on KKB depends on what market you use to buy or sell. i.e your car can not be worth $5000 if you intend to trade it in because the trade in value is always lower.


All that said. I would think you can put that extra money in the bank and drop the extra insurance. However, be diligent about keeping your car from thieves.

I agree with the person quoted above. Why not take the approx. $1500 annual savings on insurance and put it into an emergency fund?

eta: before you make your decision, I agree with others who have urged you to shop around for a lower rate

That is, I believe, the 'correct' answer, but many people don't have the self-discipline to actually do that, though. They'd spend the $1500 and really be screwed if something did happen to their car.

I would agree with dropping the collision, but I'd think long and hard about dropping the comp. I had to carry liability only for a couple of years, and it was somewhat nerve-wracking to think that if anyone stole or vandalized my car, I'd be SOL.

You might also want to consider the possibility of damage caused by an uninsured motorist. I live in a state that is not entirely no-fault, but I believe one has to carry collision in order to have uninsured motorist coverage.

In a way - insurance coverage is peace of mind... and only you can determine what that is worth to you.