We own a 1997 Rav4 with about 90,000 miles on it. We're thinking of upping our collision and comprehensive deductibles from $500 to $1000 to lower our premium.
Does this Rav still have enough value to keep the lower deductibles? Would it be worth it to fix if $1000 worth of damage occurred?
The difference in liability is $500 if a claim is filed. Figure out the difference in premiums and how long you will keep the vehicle, and calculate the likelihood of a claim (based on past experience) to determine the expected value of each option.
Almost certainly up the deductible and over 3-4 years you'll be ahead unless you are accident prone or just have a streak of really bad luck. Most people wouldn't file small claims ANYWAY. I have a $1000 deductible (because that's the maximum they'll write) and I'd NEVER put in a claim for less than $2000 or even $2500.
The car is going to be totalled at about $4000 in damage. If you have no loan on the car, dump the deductable and if the car sustains more than $1000 in damage, sell it for scrap and buy a new one.
You can look up the value at which the car will be totalled, I pulled four grand out of my ass to illustrate the point I was making. I think that $4k is a reasonably close number though. If the car is still worth more than that, then keep the deductable for a few years then drop it. I would carry the deductable at $1000. You will save more than $500 in the first year, so you can easily cover the increased exposure.
Who would carry collision coverage on a vehicle worth only 4K or even 5K? ;)
mike hunt
Jeff Strickland wrote:
That's my point. The only reason to carry collision in that instance is because the car is financed.
Then the discussion of deductible should be moot. I'm amazed that people opt for an extra high $500 deductible on comprehensive when zero deductible is only a few more dollars annually.
mike hunt
Jeff Strickland wrote:
It's more than "a few dollars annually". Indeed, when one raises the deductable, he can often save in the premium during the first year enough to make up toe out of pocket exposure.
Typically, one will by a new car and take the low deductable. Then the years go by and they realize they have a low deductable on a car that is fully depriciated and possibly not worth repairing. This is when they might ask if it makes sense to raise the deductable.
And, $500 is a low deducatable, not a high one and certainly not "extra high."
deductibles?
The is true in the case of collision coverage, but not comprehensive coverage. For six moths coverage my zero deductible comprehensive premium is $213. $100 deductible would cost $197, $250 is $157, $500 os $138. Hardly worth the cost of a broken windshield.
mike hunt
Jeff Strickland wrote:
Because there are actually 3 factors, not 2.
The two obvious ones are, what's the difference in the cost, and what are the chances having an incident.
The third is, "How much is my insurance going to go up if I make a claim?" Once you start saying, "I'd better not make this $200 claim, because it's going to raise my rate by $100 for the next 5 years" you might as well not have the coverage.
That is true of collision claims. Comprehensive claims are not 'at fault' claims and do not effect one rates. Read your policy and you will discover which losses effect your rate and by how much, and which do not.
mike hunt
kgold wrote:
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