Drop the Full Coverage?

A listener asks if it’s a good idea to drop full-coverage insurance if you drive beaters. Dave doesn’t think so since cheap cars mean cheap insurance, and if you’re broke, replacing the car could be a real hassle.

QUESTION: A listener asks if it’s a good idea to drop full-coverage insurance if you drive beaters. Dave doesn’t think so since cheap cars mean cheap insurance, and if you’re broke, replacing the car could be a real hassle.

ANSWER: It does save you on your car insurance, obviously, if you don’t have as much car insurance because you aren’t covering your own car, which is what collision is. But if you have no money and your car gets totaled, how do you get to work? And if you’re driving a beater, the collision isn’t costing you that much. A cheap car equals cheap insurance.

I don’t believe in self-insuring, especially when you’re broke. In my case, I’ve got the money to write a check to buy a car. But I added up what the car cost versus what they’re charging me to insure it, and it looks like a decent deal to me. I’m not really willing to take the risk for that much money, in other words. Even though I can write a check and replace my car, I still have full coverage because I did a cost-benefit analysis.