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Collision Decision

Rising insurance premiums lead one driver to consider cutting collision and comprehensive coverage for his automobile

By Michael J. Flack

I still have a vivid memory of my first car accident. It was 1991, I was 25 years old and was driving my 1970 Chevy Nova possibly just a little too fast on my way back to Portsmouth Naval Shipyard. I'd like to say I was heading back to see a girl, but it was more likely a date with a cold beer and an episode of "In Living Color."

An insurance agent documenting damage to a car. Next Avenue, collision insurance
"As a general rule, if the cost of these coverages exceeds 10% of your vehicle's current value, it might be a good time to consider dropping them."  |  Credit: Getty

I lost control of my car on the Merritt Parkway in Connecticut after I tapped the brakes rounding what I remember to be a dangerously sharp curve — it didn't help that my car was equipped with drum brakes . . . on all four wheels. The subsequent collision with the guard rail occurred in slow motion like I was in the movie The Wild Bunch or a race car with an in-car camera.

Thankfully, I didn't hit anyone else or injure myself and the damage to my car was limited to the right front end. The wrecker who towed my vehicle from the scene pulled my front end out with a chain attached to the winch and I was on my way an hour later. Ahhhh, they don't make 'em like that anymore.

Insurance Premium Soars

It was the second thought I had after USAA recently informed me that my auto insurance premium jumped 16%. My first was maybe it was time to drop collision and comprehensive.

So I did what any car owner would do in 2024: I asked ChatGPT.

So I did what any car owner would do in 2024: I asked ChatGPT. Unfortunately for you, its reply was much too long, dry and trite to be included here. Though I was able to extract this nugget, "As a general rule, if the cost of these coverages exceeds 10% of your vehicle's current value, it might be a good time to consider dropping them."

So we're all on the same page, these are the applicable definitions per my USAA Policy:

"Collision" means the impact with an object and includes upset of a vehicle. Loss caused by the following is covered under Comprehensive Coverage and is not considered collision: fire, missiles or falling objects; hail, water or flood; malicious mischief or vandalism; theft or larceny, riot or civil commotion; explosion or earthquake; contact with bird or animal; windstorm; or breakage of window glass. If breakage of window glass is caused by a collision, you may elect to have it considered a loss caused by collision.

To get my "vehicle's current value" I entered my car's Vehicle Identification Number, or VIN, into the Kelly Blue Book website, then added its transmission (manual 6-speed), current mileage (99,570), zip code (64108), then confirmed all its accoutrements and then input I was interested in "selling my car" (as opposed to "trading in my car").

Then came the hard part, selecting my vehicle's condition: fair, good, very good or excellent. It reminded me of "A Prairie Home Companion's" Lake Wobegon, where ". . . all the children are above average." I guess in Lake Kelley there are no "beaters, clunkers or rust buckets."

It reminded me of "A Prairie Home Companion's" Lake Wobegon, where ". . . all the children are above average." I guess in Lake Kelley there are no "beaters, clunkers or rust buckets."

I went with "very good," as I felt that my car was in, well, very good condition. I was then informed that its value was $6,504 (to a private party), which was corroborated by getting an offer from CarMax for $6,000.

It all seemed quite straightforward — that is, until I checked in with Edmunds.com, which valued it at $8,047. This discrepancy in turn led me to use the internet to peruse a number of 2013 Elantras for sale, which strongly suggested that if I wanted to buy my Elantra it would cost me at least $9,000, which is the asking price I decided to go with. Since I had only paid $9,300 for it, I was more than a little surprised it only lost $300 in value over the last five years.

Do I Need All of This Coverage?

My current yearly collision and comprehensive premiums (with $1,000 deductible) are $300 and $85, respectively, a total of $385, which is 4.3% of my "vehicle's current value," it clearly indicated that dropping coverage was not in order.

While I appreciate the concreteness of "10% of your vehicle's value," I found myself wondering where this number came from. I guess ChatGPT didn't want to share its sources, so I decided to ask advice from the next best financial resource available.

According to Forbes, "The standard rule of thumb used to be that car owners should drop collision and comprehensive insurance when the car was five or six years old, or when the mileage reached the 100,000-mile mark." As my car is 11 years old and pushing 100,000 miles, it indicated dropping coverage was in order.

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They went on to mention "but now it depends on the value of the car and its replacement parts." To be honest I'm not sure what to make of this new guidance. I realize that prices have increased but shouldn't this decision always have been based "on the value of the car and its replacement parts?" I'm not sure what changed.

Forbes went on to say that "comprehensive insurance is a better value for the money than collision coverage." The idea being to drop collision and bet on yourself (and your wife) being a safe driver. They also opined that "ultimately, like most forms of insurance, it can come down to peace of mind."

Forbes went on to say that "comprehensive insurance is a better value for the money than collision coverage."

I then asked USAA for advice. Its representative was as courteous and knowledgeable as always, but reluctant to provide any specifics. The representative did mention that I was paying extremely low rates. I think this was most likely due to being a 36-year customer who, due to some driving prowess and more luck, has never made a claim.

How Much Worse Could It Be?

This made me realize that not filing a claim back in 1991 may have paid off. It didn't matter that I could not have made a claim back then because I didn't have collision coverage (my 21-year-old car's Blue Book value was just slightly north of a day's pay). What mattered, I thought, was that I had an unblemished record.

Although USAA has been my provider for decades, money is money, so I reached out to GEICO for a second opinion. Their online quote for collision and comprehensive was 4% higher, and their total premium was 67% higher. That was when I realized that while a 16% premium increase wasn't good news, it could have been a whole lot worse.

I considered dropping only collision coverage, but there are no half measures in the Flack family, so I seriously thought about dropping both collision and comprehensive. After all, I have saved enough to replace my car, but in this specific case there is something to be said for having peace of mind . . . at least for another year.

Michael J. Flack
Michael J. Flack is a retired businessman. His New York upbringing and naval nuclear engineering training enables him to bring some skepticism and humor to the subject of personal finance. He is a contributor to the book "My Money Journey: How 30 People Found Financial Freedom — and You Can, Too." Read More
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