Should you drop collision coverage from your old car?

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PostPosted: Thu Sep 01, 2011 9:07 pm   Post subject: collision coverage 2011  

transferring title of a 2003 Honda Odyssey EX-L (leather) to my 23 yr old son. It's now 8 yrs old and I see it being sold for around $10,000 on the market so I'm wondering whether we should drop the coverage or not. It's costing $762 for that coverage with $1000 deductible. This rate is quoted with him being the main driver but the vehicle still in my name. It'll probably go up when he's the title holder. What are your thoughts?

Amy


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hondavan
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PostPosted: Thu Sep 01, 2011 11:48 pm   Post subject:   

Put the title in his name with a lein on it, you carry the note. He can't go to a title loan company and get a loan against it with you having first lein. Make him put the insurance in his name and you will not be legally liable for any damages caused by his negligence. If he isn't responsible enough at 23 to have the title in his name and pay the insurance, you are enabling him. Been there done that.



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MikeoftheOzarks
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PostPosted: Fri Sep 02, 2011 2:56 am   Post subject:   

Amy,



Look at the cost for Collision once he has his own policy.



If the cost of collision is more than 10% of the value of vehicle(less the deductible) every 6 months, you would save the value of the vehicle by dropping collision in 5 years.



But if your son is like most people, he won't bank the money in an emergency fund.



If the loss of the vehicle through Collision would cause a financial hardship, and your son would need to buy another vehicle, without the having the credit (or wanting the cost of debt), or having the resources to buy a new car, it may make sense to keep the Collision.



If your son is new to driving this vehicle (it sounds like he has been driving it, if he has been rated on your policy for driving it) or will be doing more driving, or driving in new areas which are unfamiliar to him, you may want to keep Collision, at least for the short term, until his driving adapts to his new routine.



I agree with Mike about having your son pay, at least in part, for the insurance, if he does not do so now.



Gifted cars, with parents paying the insurance, are often soon wrecked. But if your son has been driving since he was 16, and has been driving this car responsibly under your policy, you may have no problem at all.



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