Q: I dropped the collision and comprehensive part of my car insurance in October on advice to save but on Thanksgiving day my car, which was legally parked, was broadsided by an uninsured driver. As a result, it's my loss -- a loss of $9,000 and no transportation. My car was damaged beyond repair. Not one penny did I get to help me through my insurance company.
A: Dropping collision and comprehensive coverage to save money is a calculated, educated risk. It's best for those with very low-value cars and/or those with the resources to replace a car if it's damaged. If your car was worth $9,000 then you probably shouldn't have dropped your collision and comprehensive coverage. The rule of thumb is that you can consider dropping collision and comprehensive when the premium for this coverage exceeds 10 percent of your car's value. I doubt your collision and comprehensive premium was $900. And rules of thumb only work if you can afford them. A $9,000 car is painful to replace out of pocket. A $3,000 car might be more manageable. That was the price-range of the vehicle owned by the Baltimore couple to whom I offered this advice.
Q: One thing I would like to see is what type of car insurance these folks have that you can save $1,200 per year by dropping collision and comprehensive. I evaluated ours and it would save me no more than $300 per year and is only around 30 percent of the total insurance bill. This is nothing to sneeze at, but not the savings claimed in the article.
A: Insurance industry experts say that dropping your collision and comprehensive coverage usually results in savings of 30 to 40 percent, so yours is right in the zone. Keep in mind, the couple I advised was thinking of dropping the coverage on two vehicles, not just one. But you bring up a good point. Their car insurance seemed expensive to me, too. Another tried and true way to save is simply to shop around. When I was researching "SAVE BIG," I found a $1,478 difference between two identical policies from two very reputable companies. And I uncovered a $1,440 discount by buying car insurance through a warehouse club like Costco or Sam's.