Insurance Debate.... Liability vs. Full Coverage

odusgolp
odusgolp Posts: 10,477 Member
in Chit-Chat
My girlfriend and I are discussing the merits of having Liability only vs. Full Coverage Auto Insurance on my vehicle...

Age: 11 Years old
Value: $2000-ish.

I've always had full coverage just... because I always have. She's telling me it's pointless.

Someone smart, tell me what to do.

Replies

  • trojanbb
    trojanbb Posts: 1,297 Member
    I don't see the point in having full coverage on a $2k car...
  • IpuffyheartHeelsinthegym
    IpuffyheartHeelsinthegym Posts: 5,573 Member
    personally, I always thought liability was enough, but my ex explained that I have no money, so, if goodness forbid, something should happen that it was totaled, therefore full coverage was for the best, even if its a POS, like mine. I can't stand him, but that actually makes sense.
  • odusgolp
    odusgolp Posts: 10,477 Member
    personally, I always thought liability was enough, but my ex explained that I have no money, so, if goodness forbid, something should happen that it was totaled, therefore full coverage was for the best, even if its a POS, like mine. I can't stand him, but that actually makes sense.

    This is where I get lost... I really don't understand insurance, so let me be up front about that!

    But I'm in the same boat. Single mom with little money, so... Do I pay a lower monthly rate, or keep it where it is in case a total my car or someone steals it (insert hysterical laughter at that idea here), etc.
  • LuckyLeprechaun
    LuckyLeprechaun Posts: 6,296 Member
    paying for full coverage is usually thought about in terms like this:

    how much will the full coverage cost you over the course of a year? Is that more than the value of the car?

    Sounds like in your case you'd do better to put the cost of the full coverage into a savings acct. Then when you crash or wanna get rid of it, you have the money to replace it, or the down payment to move on.
  • the_journeyman
    the_journeyman Posts: 1,877 Member
    If you can afford to replace and/or do without an immediate replacement, liability (and under/uninsured motorist) is the way to go.

    JM
  • surlydave
    surlydave Posts: 512 Member
    Keep it where it's at. As others have said, if you total your car what will you do for transportation? Even if it's only worth $2k that money you won't have after a total loss for a down payment on a new (or used) car. I was in an accident about a year ago. My car wasn't totaled, though close to it. Although someone turned in front of me, and the police report clearly shows the other driver as at fault, their insurance company denied the claim and it is going into litigation. In short, without my own coverage I would have been screwed even more and without a car or the money to get one.
  • diddyk
    diddyk Posts: 269 Member
    Liability only. I recently sold my $2,000 car. I don't remember the exact amount of savings/year, but the insurance company wouldn't have given me $2,000 for the car if I wrecked it, and I figured out the savings on collision/upset would be better spent saving for my next car.
  • Begood03
    Begood03 Posts: 1,259 Member
    Get ride of full coverage. The way it works is, the insurance company doesn't pay you what it is worth. They pay you what a used car lot would give you for it.

    They have a set of used car lots in the area, and they ask them what they would pay for it to buy it from you. Which is much less than what you can sell it for to someone off the street.

    If it a worth $2000, they would probably give you $1000. Is it worth paying the difference for the whole year, to only get $1000 if something happens?

    I have been there, and done that.
  • ILoveTheBrowns
    ILoveTheBrowns Posts: 661 Member
    as an insurance agent i would say drop the full coverage.....or just drop the collision part....comprehensive is usually only a few $ per month
  • tmos512
    tmos512 Posts: 119 Member
    I had liability only on a car of about the same value...then I ran into a horse on a major highway. Totaled the car, received nothing from the homeowners insurance of the horse owner. Several thousand later in insurance co-pays, I wished that I'd had at least comprehensive to cover the loss of the car. I'll never have liability only again.
  • nathanielnieman
    nathanielnieman Posts: 10 Member
    2K car I would have basic coverage they will just total it if something happens.

    Then again if you can't afford a new car or to fix it it is nice if something happen just don't expect 2K.

    If you can afford the repairs or to replace the car why pay them x amount to replace it they are just making money off you.
  • concordancia
    concordancia Posts: 5,320 Member
    There is no sound reason to have full coverage.

    However, to reap the benefits of not having full coverage, you would have to put the money you save into a savings account so that it is available if something happens. The plus side to this is the money is available if "something" is you blow a head gasket and decide to get a newer car.
  • SquidandWhale
    SquidandWhale Posts: 259
    The truth is, if you wreck your car it's going to cost more for your insurance to fix it than it's worth and they'll just total it out and cut you a check for its value. No point in paying full coverage.
  • melsmith612
    melsmith612 Posts: 727 Member
    After working in insurance claims for a couple of years I can say for certain that two things are true:

    1) Insurance is not just for accidents.
    2) Full coverage is absolutely necessary if you own a home.

    I say this because I have processed insurance claims for a huge oil/gas company. If you accidentally spill a few gallons of gas in a gas station parking lot while it's raining because your 10+ year old car's gas tank just sprung a leak, you could be looking at EASILY $10k+ in remediation costs for that spill. Typically, your basic state minimums policy is NOT going to cover this. If that's the case and you can't pay for those costs out of pocket, guess what comes next? Court. They WILL put a lien on any property you own OR even have the costs automatically taken out of your wages through a court order. I have actually seen this happen. The company I work for has its own office for its legal team. And we're one of the smaller companies with only a few hundred gas stations.

    So, saving money by not having full coverage insurance is sometimes a benefit but it is also a MAJOR liability - especially for older cars.
  • likeschocolate
    likeschocolate Posts: 368 Member
    Liability only (using simplified decision tree model).

    Let's assume some numbers (you can put in your own / replace in the equations below).
    * Planned holding of car: 5 years.
    A) Liability for 6 months: $120
    B) Full coverage for 6 months: $200

    Option A) In 5 years, you spent on liability: $120 * 2 (payments per year) * 5 = $1200
    Add 5% of replacement value (i.e., 5% chance you pay $2000 if stolen) = 0.05 * 2000 = $100
    Estimated payout over 5 years: $1300

    Option B) Full coverage over 5 years (i.e., $200 * 2 (payments per year) * 5 = $2000

    Average savings with Option A) 2000 - 1300 = $700

    Note: Given that insurance co.s push you to buy full coverage, it suggests they make more money on full coverage than liability -- which means it's in your interests to avoid it.
  • the_journeyman
    the_journeyman Posts: 1,877 Member
    But I'm in the same boat. Single mom with little money, so... Do I pay a lower monthly rate, or keep it where it is in case a total my car or someone steals it (insert hysterical laughter at that idea here), etc.

    Theft is usually covered under comprehensive rather than collision. I don't carry collision on my truck due to age, value, and it's an "extra" that wouldn't leave me carless if gone. I DO carry comprehensive due to theft concerns.

    JM
  • neandermagnon
    neandermagnon Posts: 7,436 Member
    personally, I always thought liability was enough, but my ex explained that I have no money, so, if goodness forbid, something should happen that it was totaled, therefore full coverage was for the best, even if its a POS, like mine. I can't stand him, but that actually makes sense.

    This is where I get lost... I really don't understand insurance, so let me be up front about that!

    But I'm in the same boat. Single mom with little money, so... Do I pay a lower monthly rate, or keep it where it is in case a total my car or someone steals it (insert hysterical laughter at that idea here), etc.

    don't even laugh. I had a ten or fifteen year old rover metro (if anyone doesn't remember them or if they were only available in the UK or something, I'm talking about a very small car with a 1 litre engine that's the kind your grandmother would own to drive herself to the shops and back once a week)................... it was stolen. I seriously couldn't believe it... but it was. The police recovered it from a road in the same neighbourhood where I lived, some kids stole it, joy rode it, then left it in someone's garage... about an hour after I called in to report it stolen, the owner of the garage called the police to inform them that an old rover metro had been parked in his garage... LOL

    the police even took DNA samples from the steering column where the kids broke it, because they were pretty sure which toerags it was, but needed the evidence to prove it was them.

    I had 3rd party, fire and theft insurance, so the insurance company fixed it up. I think British insurance companies work differently to USA because liability vs full coverage sounds like it's the same as 3rd party versus fully comp, but you can get in between insurance policies that cover more than 3rd party, but are not fully comp.

    btw I knew how old the car was at the time, just can't remember looking back... I bought it when it was ten years old and it died of a blown gasket when it was 15 the same week that the Rover car company went bust LOL (interesting coinciedence)
  • donnachan5437
    donnachan5437 Posts: 1
    i'm also wondering this!

    been getting quotes from everywhere today.

    i got 45/month full coverage quote from 4auotinsurancequote and then 35/month liability only quote from allstate.

    which one is better? is full coverage worth the extra $10??

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