Scott Schrier: Hi, my name is Scott Schrier. I’m with the Schrier Insurance Agency and also a member of the Insurance One Group. We get the call a lot of times questions from our clients, when does it make sense to take full coverage off of their car? We say full coverage, we’re usually referring to the comprehensive and the collision coverage. Age is definitely a factor. Most people think, “Oh, if my car is 10 years old or older, I should take collision coverage off.” Age is a factor, but more important than age is the value of your car.
Probably the best place to find value is if you go to Kellysbluebook.com, which is Kbb.com, you can put in your vehicle information and actually turn what the value of your car actually is. Now, insurance companies do not use Kelly’s Blue Book in event of a total loss, but that would just give you a good idea of what is the value of my car worth?
And when you’re on kbb.com, look at what’s called the trade in value. That’s probably most closely what you could expect to get for your car in the event of a total loss. Let me get down to it for you. Let’s say on your auto policy, you’re carrying collision coverage, and your premium is let’s say $200 every six months. So your true cost is $400 a year. And you have a $500 deductible. So in the event of a total loss, what you’re really paying to insure that vehicle is $900. $400 in premium, plus a $500 deductible.
Let’s say your car, you went on Kelly’s Blue Book and your car is valued at $3,000. I like to look at a five to one ratio. So my cost out of pocket would be $900, what I want to be insuring should be worth about $4,500. So taking the emotion out of the vehicle, putting more into a dollars and cents idea. So if my cost is $900, my value is $3,000 that’s about a little over a three to one ratio. In that situation, my advice would be it probably makes sense dropping off collision. The other part of that is what’s called the comprehensive coverage, and that premium is usually much less than the collision premium.
So a lot of times what we do with our clients, we might keep on comprehensive, but drop the collision. That is an option. You don’t have to carry both of those. The most common comprehensive claim is usually a windshield. And the cost of a windshield in 2005 vehicle might be the same cost as a brand new windshield on a 2020 vehicle. So sometimes we might want to keep comprehensive and just drop collision, or we always can drop both.
But again, just to review with you, determine the value of your vehicle or a good idea what the value would be and use that ratio. Five to one ratio a lot of times makes sense.
First, I hope this was helpful for you. Any questions, please call our Olney office. We’re at (301) 774-0801 or our Gaithersburg office at (301) 840-7283. Make it a great day. Thank you for your business and as always, any questions, please feel free to call us, we’d love to help you out. Thanks.