# Car 5 years old.. time to cancel collision coverage.



## hystat (Jun 18, 2010)

My car is a 2007. The collision premium never went down one red cent, despite the car's drastic depreciation so I said the heck with collision. 
I hope that isn't a bad omen, but hey... gotta take a chance sometimes. 
Saving $400/year sans collision.
I'm pretty sure with 110,000KM on the car, the insurance would give me a lowball payout if I crashed it. Probably less than $7500.


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## blin10 (Jun 27, 2011)

and if you crush it into someone else? 400 will be not much at all when you'll be on a hook for 10k+


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## andrewf (Mar 1, 2010)

$400 per year for collision sounds cheap to me...

$400/$7500 =~5% per year. Not sure if the probably of getting into a significant collission is less than this.


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## rikk (May 28, 2012)

hystat said:


> My car is a 2007. The collision premium never went down one red cent, despite the car's drastic depreciation so I said the heck with collision.
> I hope that isn't a bad omen, but hey... gotta take a chance sometimes.
> Saving $400/year sans collision.
> I'm pretty sure with 110,000KM on the car, the insurance would give me a lowball payout if I crashed it. Probably less than $7500.


I agree in that self insuring is ok ... if the car's worth that $7K, and you'd have what ... $500 deductible, then you're looking at $6500. If you're willing to risk a loss of $6500 then why not ... e.g. how many vehicles have I written off ... zero. It probably never went down because you had replacement coverage ... if written off you'd have gotten a new 2013/2014 equivalent or the cash.


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## nathan79 (Feb 21, 2011)

andrewf said:


> $400 per year for collision sounds cheap to me...
> 
> $400/$7500 =~5% per year. Not sure if the probably of getting into a significant collission is less than this.


That's 5% of today's value -- but next year the car might only be worth $6000, and in 10 years maybe only $1000... so that 5% becomes substantially more. On the other hand, premiums should eventually decrease, so who knows. I find it odd that premiums haven't decreased after 5 years.


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## hystat (Jun 18, 2010)

That was with $1000 deductible I think - so the margin between making a claim and having a write-off is slimming down every day.
The coverage is not replacement coverage as far as I can tell, and somehow the premiums never do go down. Another insurance "scam".... go figure. 
I'm willing to take the risk. Next year the coverage will be close to 10%.
Maybe it will make me a more attentive driver.

This _is _the frugality thread. Maybe I would buy the same car a bit older to replace what I wreck... I could live with that. 
I could also sell my wreck for $500 to $2500 depending on how bad I crush it into someone else... something people never consider when their car is written off. It isn't valued at $0 unless it was seriously on fire.


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## Four Pillars (Apr 5, 2009)

I need to do this. Or at least look at the cost reduction.

2004 Jeep Liberty - I'm thinking it's probably not worth a heck of a lot.


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## Nemo2 (Mar 1, 2012)

We have a 2005 Civic......$2 million comprehensive....zero collision.


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## Barwelle (Feb 23, 2011)

I don't have collision. My car is worth about $6,000, which is low enough that I'm fine knowing that I'll have to pay for a new one if I total it. Plus, I'm one of the 90% of people who thinks they are an above-average driver.



blin10 said:


> and if you crush it into someone else? 400 will be not much at all when you'll be on a hook for 10k+


I thought that, even without collision, your insurance would still cover the cost of the other car if you are at fault. Just not your car. Or am I reading your post wrong? Cause in the OP he said his car is worth $7500 but you say 10k+.

edit: hystat, maybe the obvious suggestion is to shop around. A couple years ago I did that and saved probably 20% vs the insurer I had been using. Maybe collision would still be worthwhile if it can be had for less.


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## jcgd (Oct 30, 2011)

Yes, collision protects you while PLPD protects everyone else. If someone else is at fault and you don't have collision it is my understanding that the other person's PLPD is what would cover you. If you hit a tree without collision you are out of luck. If you hit someone else your PLPD covers them, and your collision covers you if you have it.

That is why PLPD is mandatory while collision is not. You can risk your personal insurance, but you cannot risk someone else's.


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## Jungle (Feb 17, 2010)

That is also correct in Ontario. 

We had someone smash into us a couple of years ago.. insurance said they were 100% at fault. The damage was paid in full and we were not a fault. No marks went against our record. 

So the whole collision thing is kinda 50/50 chance.

Then once you start making claims where you ARE at fault.. there is a chance this will increase your premium for many years...
In some cases, it may be best to just fix the damage yourself and let insurance pay for things you can't normally afford.. like critical injury of a family of 4 in a accident.


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## carverman (Nov 8, 2010)

hystat said:


> T
> 
> I could also *sell my wreck for $500 to $2500 depending on how bad I crush it into someone else*... something people never consider when their car is written off. It isn't valued at $0 unless it was seriously on fire.


What are you driving if you think you can get that much for yer wreck?...a Mercedes Benz or Porsche?



> The wrecker handles two types of cars. One is the late-model car that has been in an accident and is beyond repair. The other is the older car that has deteriorated over time. The wrecker usually prefers the late-model wrecks, because the demand for the salvageable parts will be high. *A very expensive, late-model car in which most of the parts are still in good condition may be worth as much as $1,000 to a wrecker*. This is amost a rarity, however, and most wrecked cars are worth *not* *more than $150*. Very old cars are usually worthless to the wrecker: even if the car is running, its parts will be in poor condition, and the demand will be low for the few parts that can be salvaged


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## m3s (Apr 3, 2010)

Jungle said:


> Then once you start making claims where you ARE at fault.. there is a chance this will increase your premium for many years...
> In some cases, it may be best to just fix the damage yourself and let insurance pay for things you can't normally afford.. like critical injury of a family of 4 in a accident.


This is the kicker for me. If I'm ever at fault I would really hate to have that on my record anyways (20-something male driving a 2 door is bad enough as is) If you have a car loan, they require you to pay for full coverage. Yet another reason not to have a car loan.. When I was younger they wanted $1000 for collision a $2500 bike... never looked back since and probably have a free car by now. It's not the end of the world if I have to replace a car anways, and it keeps me accountable for my own driving


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## financialnoob (Feb 26, 2011)

I don't disagree with the principle of giving up on collision at some point, though 5 years seems a bit early for me. I guess it depends on the model, but I'd anticipate some of these vehicles still going for around $8 to $10K.

Just a point on the lack of adjustments on collision coverage despite the car's age.

The costs of repairing a car are roughly the same regardless of value of the car. There's just a certain amount of labour and parts that are required, and certainly the labour cost doesn't scale based on the model year. In many instances, it can cost more to repair an older car due to more complex layouts that aren't as easy to navigate as modern vehicles or lack of available parts.

The significance of the expense vs. the value of the car may change, but the actual cost of repairing doesn't. A bumper replacement will cost more or less the same for a 2007 as a 2013 model, even if the 2007 model is worth significantly less. They're totally separate things.


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## m3s (Apr 3, 2010)

financialnoob said:


> A bumper replacement will cost more or less the same for a 2007 as a 2013 model, even if the 2007 model is worth significantly less. They're totally separate things.


I never had a real issue to source good cheap parts for my 97 Honda Accord from scrapped cars. Back then Honda's were even mix and match (I had better parts from Preludes, V6 Accord, Odyssey, even lots of newer generation parts were all bolt ons)

My new car has to be plugged into a special diagnostic computer by a shop to do anything, even to change the wheels. Probably easy enough to source scapped parts but they would cost a lot more for sure

Remember if insurance says a fender bender will cost $2000 to fix, it's probably a $200 job for a scrap yard. In fact, most body shops will quote you double the price for an insurance. Interestingly SK insurance controls the SK scrap yards themselves, and have the cheapest ins in Canada!


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## SpIcEz (Jan 8, 2013)

carverman said:


> What are you driving if you think you can get that much for yer wreck?...a Mercedes Benz or Porsche?


Though it might not always work, allot of people with late model cars that have a front or rear end collision only post their vehicle for sale online for 2500$ or around there.

They wont sell it to a wrecker, but someone who is looking to maybe update their version to an upgraded one (I.e. Base Golf to Golf GTI), for the body pannels, electronics, leather interior, upgraded brakes, etc...


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## RBull (Jan 20, 2013)

I'm in favour of dropping collision when it makes sense to that individual person. 

You have to decide at what car value you would not make a claim on a collision that is your fault. The car should be paid for and you also should have the money to purchase something to replace it - (likely newer) and be comfortable with financing the difference (at most) between old and replacement. Anything else - no - you need collision insurance.


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## Rusty O'Toole (Feb 1, 2012)

If you total your car can you afford to pay for repairs or buy another car? Even a cheaper car?

I have not had collision on my car in 30 years and have NEVER written off a car. But if I had to, I could write off a car and not suffer irreparable financial harm.

This assumes your car is paid for, if you have a car loan you have to have insurance.

In that time I have saved enough on collision insurance to buy a new car.

Insurance is always a bad deal, in the sense that they always must charge more than the risk is worth to stay in business, pay expenses and make a profit. The only time it makes sense to buy insurance, is when a small, certain expense you can afford, is better than a possible disastrous loss you can't afford.


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## Jungle (Feb 17, 2010)

With our accident, the body shop charged the insurance company about $4000 to replace the rear bumper. It was plastic. 

I have replaced many bumpers with my old moded cars and this is fairly easy to do for me. But since I was not paying for the damage, I could care less and let the insurance pay for it. (100% not at fault) 

In the last 3 years, $15,000 has depreciated off the value of our car. We didn't even lose that much money when the stock market crashed in 09. 

So I took off collision last year and will self insure this risk. I can also do some repairs as I have experience with body work, including painting a car.


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## My Own Advisor (Sep 24, 2012)

Rusty and Jungle,

So you think any car under, say, a value of $3000 should have no collision on it?


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## financialnoob (Feb 26, 2011)

mode3sour said:


> I never had a real issue to source good cheap parts for my 97 Honda Accord from scrapped cars. Back then Honda's were even mix and match (I had better parts from Preludes, V6 Accord, Odyssey, even lots of newer generation parts were all bolt ons)
> 
> My new car has to be plugged into a special diagnostic computer by a shop to do anything, even to change the wheels. Probably easy enough to source scapped parts but they would cost a lot more for sure
> 
> Remember if insurance says a fender bender will cost $2000 to fix, it's probably a $200 job for a scrap yard. In fact, most body shops will quote you double the price for an insurance. Interestingly SK insurance controls the SK scrap yards themselves, and have the cheapest ins in Canada!


I can see the parts argument, but not the labour. It sometimes does take more work on some of the older cars to figure out what's wrong. 

My mom just took her car in for various servicing and the labour was by far the greatest expense, and that doesn't scale based on the age of the vehicle is all I'm saying. To expect collision premiums to drop based on depreciation isn't really a fair connection to make.


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## Sherlock (Apr 18, 2010)

I also don't have collision (but do have comprehensive). Good choice imo.


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## Jungle (Feb 17, 2010)

My Own Advisor said:


> Rusty and Jungle,
> 
> So you think any car under, say, a value of $3000 should have no collision on it?


I would say YES. My car is worth $14k and I have no collision on it. 
If I write of the car and I'm 100% at fault, this will be my total loss. If I'm not at fault, or partially, it's covered under insurance based on the % at fault. It's a risk I'm willing to take. BTW I use transit to commute to work. I also have a good driving record. I'm the guy accellerating slowly and doing 95 in the slow lane to save gas. Grandpa would be proud.


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## slacker (Mar 8, 2010)

I cancelled mine when I feel that I can self insure the value of the car. It's always a better deal if you have the resource to self insure, as compare to paying a profit taking insurance company.

In my case, when my car's value dropped below $15k, I feel pretty good about being able to handle the situation where I smashed it up, and had to replace it out of my own pocket.


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## My Own Advisor (Sep 24, 2012)

@Jungle,

ha  Thanks, I'm going to pursue this myself. Doesn't seem to be worth paying. My car is over 10-years old. I suppose at some point, self-insurance like many things via an emergency fund is the right way to go.


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## MoneyGal (Apr 24, 2009)

MAO: Milevsky's "Your Money Milestones" has a good chapter on self-insurance -- might be worth a look.


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## hystat (Jun 18, 2010)

Jungle said:


> With our accident, the body shop charged the insurance company about $4000 to replace the rear bumper. It was plastic.


 I was just checking RockAuto for my bumper cover (can't find the rear but they list the front one):
VARIOUS MFR Part # FO1000647 {#6W7Z17D957APTM}
Primed / ready to paint; Front *CAD$139.42*


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## Jungle (Feb 17, 2010)

Wow so ^^ that means I want to install and repair my self and also start a business where the insurance companies pay me massive margins to fix cars. No wonder my insurance is so expensive. Hmm..


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## My Own Advisor (Sep 24, 2012)

Thanks MoneyGal, I'll check that out.


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## Rusty O'Toole (Feb 1, 2012)

My Own Advisor said:


> Rusty and Jungle,
> 
> So you think any car under, say, a value of $3000 should have no collision on it?


That is not what I said but I`m not disagreeing.

If you have a $3000 car and $1000 deductible the most you could ever get if you wrote off the car is $2000. How much do you pay for collision. $500. So, do you write off a car every 4 years.

Could you take a possible loss of $3000 without being crippled financially. Remember you already have $1000 deductible. If so, why not save the $500 a year.

If it makes you feel better put the money you save in a special piggy bank every month or every year and watch it grow.

PS My experience of insurance companies is they will fight tooth and nail to chisel you out of what they rightfully owe. You may think you have insurance but if you get half what you are entitled to without a long expensive lawsuit you are lucky.

So, take that into account when calculating whether insurance is worth buying.

PPS And if you do have a claim, and are lucky enough to get half what they owe you, count on them doubling or tripling your premiums for the next 7 years, whatever it takes to get back the money they paid you plus loan shark interest.


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## MoneyGal (Apr 24, 2009)

Which is why you should have insurance for *catastrophic losses,* not replacing your phone, TV, microwave, computer or car.


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## Sherlock (Apr 18, 2010)

I'm not sure collision coverage is EVER a good idea, even on a new car. Remember, collision coverage covers you for damage to your car caused by you. Any accident you're involved in that's the other guy's fault, your car will be repaired at his expense, so you don't need collision. Even if you cause damage to your own car, if you file a claim your rates are gonna shoot up so it would make more sense in most cases to just pay for it out of pocket and not file a claim even if you do have collision. What do you guys think?


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## Sampson (Apr 3, 2009)

Sherlock said:


> Even if you cause damage to your own car, if you file a claim your rates are gonna shoot up so it would make more sense in most cases to just pay for it out of pocket and not file a claim even if you do have collision. What do you guys think?


Depends on how much your car is worth.

Rising premiums seem like an industry scare tactic. How high would your premium have to rise and for how long to cover say $20,000, $30k, or more?


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## Jungle (Feb 17, 2010)

Agree with Sampson. Let's say you just bought a 40k car with is not uncommon (although I would never spend that much) and made a mistake and wrote it off. Poof there's 40k gone.


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## hystat (Jun 18, 2010)

another thing to remember if a person tows... I *think* anything you tow has the same coverage as the vehicle... so cancelling collision on the car cancels collision on the boat/tent trailer/snowmobiles etc (on highway)..


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## thebomb (Feb 3, 2012)

I was just in an accident Thursday morning driving into work. Completely the other drivers fault. Just found out yesterday my car is a write off, 2004 Acura TL, fully loaded with every option possible.....great car, no problems whatsoever but high km due to a long daily commute. Waiting to see what they are going to offer me, but all the comparables I see in autotrader are about 8k without the navigation option. I would expect about 9-10k but expect them to lowball me. I am planning on NOT accepting their first offer. Any one ever do this and have luck with the amount being increased? I miss my car....I am ok though and thats all that matters. The idiot's car was written off too.


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## Sherlock (Apr 18, 2010)

You got the same car as me, dealers are still selling 04 TLs for as high as $13k (see http://www.autotrader.ca/a/Acura/TL/CONCORD/Ontario/5_15413757_ON20080702112913040/ ) so I think they should give you at least 10k.


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## cutchemist42 (Oct 15, 2012)

Wish my province allowed us to drop it, but I live in socialized Manitoba. Still paying collision on a 25 year old BMW......


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## fraser (May 15, 2010)

Yes, a number of years ago we had to write off my spouses Maxima. The insurance company gave us a number. We challenged that number and we successful in getting the payout increased by about 20 percent. We live in Alberta.

I asked someone in the auto industry what a fair buy out would be. He felt that the first offer was reasonable but that we should challenge. He felt that our 'revised' offer was much higher than we would have been offered/given had we still lived in British Columbia.

As I recall, the insurance company asked us what we had spent on this vehicle in terms of repairs/tires, etc. We felt that we were treated fairly by our insurer. It is one of the reasons that we remain with them.


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