Should I Insure an Older Vehicle?

old vehicleShould they carry collision on a 2005 Saab, or any older vehicle?

They need to determine the value of the car and compare with the cost of insurance + deductible.

Then they need to decide if they want to use insurance for relatively minor damage to a vehicle.

First of all, let’s put it into context.

The average cost of insuring a car in our office is $1,500 per year. That includes liability, uninsured motorist, medical payment and physical damage coverage. Assuming someone has healthy limits of $300,000 liability, they are getting a lot of coverage for very little premium. If they had an accident and were found to be at fault, conceivably the policy could pay $300,000 for a bodily injury claim.

Again, a lot of coverage for a relatively small premium. That being said, here are a few thoughts on physical damage coverage (collision specifically).

Let’s say the car is worth $1,500 market value, the collision coverage costs $300, and the deductible is $1,000…it’s probably not worth carrying collision.

But, if the car is worth $2,500 market value, the collision coverage costs $300, and the deductible is $1,000…it might be worth carrying collision.

Part of the question is whether it’s worth submitting a claim (if it’s a single car accident, where the policyholder backs into their mailbox, for example…no other vehicles/people involved)

The more it’s worth, the more it’s worth carrying collision. At some point, it’s a decision the policyholder needs to make whether they want to spend the money and/or make a claim in the event of damage to the auto.

From a price standpoint, every claim counts. So a few minor claims, like the one described, might 1) increase the premium and 2) jeopardize future coverage. That’s the reality.

Our philosophy.

Carry as much insurance as you can afford.

Accept higher deductibles, and put those savings towards higher liability limits.

Avoid submitting minor (single car / non-liability) claims.