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Step 1: Determine the current market value of your used vehicle. Online services such as Edmunds, Kelly Blue Book, etc can help you. Step 2 : Determine the annual or bi-annual premium for auto collision and comprehensive insurance from your most current insurance statement. Also find the deductible, which is the amount you will pay when filing a claim. Step 3 : Call your insurance agent and ask them for the replacement value of your used vehicle given the policy current in effect. Step 4 : Consider the likelihood of an accident or vandalism given your driving habits and territory. Step 5 : With all the numbers in front of you, ask yourself if the premium and the risk are worth the potential insurance payout? Case Study (completed in 2008) 1. 2001 Honda Odyessey with 90,000 miles and in need of body work has a market value of between $4000 and $5000. 2. Insurance premium for both collision and comprehensive is $130.00/ six months. Collision deductible is $400. 3. The agent says my car is worth $4000, the lowest blue book value. 4. I commute 3 miles a day, without major traffic in a safe suburban area. 5. The bottom line : I'm paying $103 every six months for the chance to receive $3600 ($4000-$400) if my car was "totalled" in a accident. The payout is roughly 35 times greater than my premium. $103 * 35 = $3605. Conclusion: Keep the insurance until the used car value reaches $3000.
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