# old car, getting rid of collision coverage?



## joncnca (Jul 12, 2009)

i was reading the other car insurance post, and my wife's insurance just came up for renewal and i started switching over to another company (or will do when mine expires in a couple of months).

anyway, i received updated insurance forms and realized that my car is really old (much as it's near and dear to me). 2003 honda accord sedan, 340,000km on it.

there's a $1000 deductible...which is probably more than what the car is worth right now. plus, i've decided to stop doing major repairs and i've been preparing to replace it perhaps later this year (looking into 2008 acura TL)

i think i can probably get rid of collision coverage...maybe even comprehensive?


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## Sherlock (Apr 18, 2010)

I would definitely get rid of collision on that car (should have done it long ago).

As for comprehensive I would see how much it costs. I think comprehensive is very cheap, at least compared to collision, if the monthly cost is not that high then it might be worth keeping comprehensive just in case the car gets stolen or something.


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## joncnca (Jul 12, 2009)

i bought it at 170k for about $8k, which is what i report as my purchase price. i thought that if there was any sort of major accident (thankfully none), a write off would get me $8k even if i'd driven it to 250k and it was probably worth $4k, since i'd been paying premiums for $8k. i don't know if this was flawed logic....?

but i'm more seriously looking into replacing it later this year, so that's why it occurred to me....


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## hystat (Jun 18, 2010)

comp is usually pretty cheap and with the number of deer I have seen at the side of our road this week, I'm glad I have comp.


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## w0nger (Mar 15, 2010)

joncnca said:


> i bought it at 170k for about $8k, which is what i report as my purchase price. i thought that if there was any sort of major accident (thankfully none), a write off would get me $8k even if i'd driven it to 250k and it was probably worth $4k, since i'd been paying premiums for $8k. i don't know if this was flawed logic....?
> 
> but i'm more seriously looking into replacing it later this year, so that's why it occurred to me....



The insurance company will only pay you back the fair market value of your vehicle, no matter what you declare as the "value" of the vehicle. The thing that "value" means is that they won't be anything above that price tag.

It's definitely worth revisiting your insurance each year and updating the vehicle worth. Sometimes, as you lower the value of your vehicle, your premiums go down as well.


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## hystat (Jun 18, 2010)

w0nger said:


> It's definitely worth revisiting your insurance each year and updating the vehicle worth. Sometimes, as you lower the value of your vehicle, your premiums go down as well.


can one get "agreed value coverage" on a late model car?
I have that on my old collectible car. But I had to get it appraised ($175 for that).


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## joncnca (Jul 12, 2009)

w0nger said:


> The insurance company will only pay you back the fair market value of your vehicle, no matter what you declare as the "value" of the vehicle. The thing that "value" means is that they won't be anything above that price tag.


that's interesting...it's the kind of thing that insurance companies never tell you. the lack of transparency with all kinds of insurance always pisses me off. i understand that they need to make money, like any other business, but they prey on your fears, never pass on any savings to the consumer, and specifically don't try to educate their clients. 

that's probably why i have friends that swear never to be loyal to a specific insurance company for the sake of being loyal, doesn't matter how long your history may be, always get the best deal and shop around every year.


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## RBull (Jan 20, 2013)

joncnca
The insurance company is asking you the value because that's what they insuring as of when you start the policy. A regular car is a depreciating asset so the insurance applies to the market value at the time of a potential claim. I agree intuitively one would think the collision insurance would go down a little but the cost to repair an older car would be close to a newer one. Although insurance companies are known to only put used parts on some older cars in accidents.
To answer your question.....it's pretty straight forward. Since the value of your car is so low -near or below the deductible definitely cancel collision.


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## Four Pillars (Apr 5, 2009)

joncnca said:


> that's interesting...it's the kind of thing that insurance companies never tell you. the lack of transparency with all kinds of insurance always pisses me off. i understand that they need to make money, like any other business, but they prey on your fears, never pass on any savings to the consumer, and specifically don't try to educate their clients.


C'mon Jon - time to take some responsibility for your lack of knowledge. What you wrote above might be perfectly true, but the idea that the insurance company will only cover the current value of an item is a very basic fact which is not 'hidden' at all. 

It's not the insurance companies job to educate you - you have to spend a bit of time to learn the basics.


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## MoneyGal (Apr 24, 2009)

hystat said:


> can one get "agreed value coverage" on a late model car?
> I have that on my old collectible car. But I had to get it appraised ($175 for that).


What you are looking for is the non-depreciation waiver, but you can typically only get it for periods of two years on new cars. It protects you if you get into an accident in the early months of ownership. I knew somebody who totalled a new, leased minivan in the first week of ownership - guess what, the depreciated value of that car is nowhere near the purchase price + tax.


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## joncnca (Jul 12, 2009)

i agree it makes sense that only the current value is insured, but this is an ambiguous aspect of auto insurance that can lead one to make incorrect assumptions. i suspect that this is not a clear point for a lot of people, even if they also _guess _that it is the current value that is insured. perhaps i could have been a little more diligent in asking the broker to confirm that it is indeed the current value that is insured. but show me a clause in a policy that unequivocally explains that it is the current value that is insured.

in the absence of such a clause, is it not logical to think that the declared value is what is insured, considering the premiums do not change over time (even though the actual value of the vehicle depreciates)? thanks RBull for suggesting that the premiums do not change because the cost to repair the vehicle remains relatively constant whether it is new or old. that makes logical sense, and that is an easy explanation to accept.

you don't know what you don't know, even if appears to be basic to an onlooker. i don't descend from generations of kids who mowed their grandparents' lawns, for instance, so i don't know jack about lawn mowers while some guys i know could take a motor apart and put it back together again, blindfolded. but i know a lot about other things that they don't. so you don't know what you don't know, but i thought the point of peer-moderated message forums was to share knowledge.

i appreciate you holding my knowledge in such high esteem, mike, that you would think the 'basics' to be beneath me. modestly, i must decline your generous accolade, but it would have been more helpful were you to provide some official reference or other resource to actually address the issue i had raised.

all of us here are DIYers to some extent; i think that is one of the key defining characteristics that gives us a collective identity on this forum. but i would suggest that without limiting the importance of personal diligence on the part of the consumer, the onus of educating people on insurance matters _should _fall on the insurance companies. they should be accountable, just as you might hold the manufacturer of any product to account for educating you on the use of that product. to not hold the supplier of a product/service to account, is to perpetuate the kind of consumer complacency (of which i'm also guilty) that causes people to be disadvantaged against these companies......wait a minute, isn't that a major purpose of this forum? to help one another learn ways to defend against these faceless companies??? the answer is yes. 

the insurance company not educating you is part of the problem, and we should all boycott these companies for doing crappy business. a good business tries to add value and provide good service to its clients. it doesn't shirk the responsibility of educating its clients; rather, it should educate its clients and thereby demonstrate its superior value compared to its competitors. mike, i appreciate your kind responses in some other threads i've posted in, but the other part of the problem is being condescending and unhelpful to your peers.


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## Four Pillars (Apr 5, 2009)

Jon, I don't have time to help people who won't help themselves. It seems like you are at least a reasonably bright guy and while I can understand the knowledge gap with the current value of the car being insured, I can't understand your point that it's the insurance companies job to educate you. Their job is to make money for their shareholders.

MoneyGal made a good point in another thread that the problem with a lot of Canadians is not so much a lack of financial literacy, but rather a lack of consumer literacy or the ability to understand how products are sold:

http://canadianmoneyforum.com/showt...re-slimey-unctuous-hyenas?p=174458#post174458

I'm sorry if you didn't like my post, but I was trying to be helpful - I'd like to help push you away from relying on your insurance broker/company to educate you and do it yourself.

This applies to any kind of financial product. Are we aware of all the fees we pay?


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## MoneyGal (Apr 24, 2009)

Jon. Would you even trust "education" provided to you by the company trying to sell you its products? How exactly would they reach past your "complacency" to get your attention? 

If you google your insurance provider, I pretty much guarantee you will find more content than you can shake a stick at: take a look at this Meloche Monnex home page on car insurance: http://www.melochemonnex.com/en/home/?campaignid=PSEARGOOGCOE&gclid=CKa_jJfziLYCFY4WMgodTg0AAQ

So many FAQs...email us for a quick response...looks like about 20 pages deep of "more info" on every aspect of MM car insurance policies...

That's in addition to the Insurance Bureau of Canada, which maintains a website, places paid advertising, has a blog, a YouTube channel, a Twitter feed... http://www.ibc.ca/en/

And then there's independent insurance information. I don't know how many times I've posted that people should check "Insurance Logic" out of the library for an easy-to-read summary of insurance issues in Canada...

etc. etc. etc.


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## MoneyGal (Apr 24, 2009)

joncnca said:


> In the absence of such a clause, is it not logical to think that the declared value is what is insured, considering the premiums do not change over time (even though the actual value of the vehicle depreciates)? thanks RBull for suggesting that *the premiums do not change because the cost to repair the vehicle remains relatively constant *whether it is new or old. that makes logical sense, and that is an easy explanation to accept.


FWIW this is not the reason that premiums may not change over the useable lifetime of a vehicle. The premiums reflect the cost of replacing/repairing vehicles in the pool of people who have insured their vehicles with that insurance provider, given assumptions about how often people are going to make a claim and the depths of the claim requirements, based on the insurer's experience with claims, and allowing the company to meet regulated reserve requirements, maintain operations and turn a profit. 

If you wreck a car early in your policy, you will receive much more value than is represented by the premiums you've paid. If you wreck a car late in the policy, you may receive value which is equal to the premiums you've paid.


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## Ponderling (Mar 1, 2013)

*Insurance and next car money saving ideas*

old school idea here - pre-save for your next car.

Part of you non-registered investment, once you get yourself financially together, is saving for you next car. You know most of the time you are going to need it.

If you can get yourself out of the vibe of 'needing' a new car, then the amount needed to be saved is much lower. 

My wife has just bought a 'new to us' car, three years used. $12k. Likely to last us for about 10-12 more years. Since bought for cash we can insure it how we want to. 

We choose comprehensive for a few years, usually three, then drop down to basic minimum coverage, and put the differnece in as an extra sweetener to save towards the next car. By then we have saved at least 3k so if we get into an accident and the vehicle is a white off we are part way to buying the replacement. 

She will keep saving $100 per month to go to top up our emergency savings until buying a short term investment makes sense. The money is there to do the ongoing maintenance that owning cars for the longer haul need from time to time. It in the mean time can be invested in short term issues, thus working to grow our assets.

Her still relable old car was getting long in the tooth; 16 years and 275k tercel bought 5 years used. So I am driving the tercel and leave my still insured truck parked in my underground spot at work until the tercel needs a costly repair, at which time it will go to the scrap yard. The truck lets us not rent vehicles wheen one is in the shop, or pay delivery charges, and take vacations as a family, so that is why it is still in the mix.


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