Do I Need Collision Insurance on an Old Car?

If you own a motor vehicle, you must purchase some type of car insurance. Depending on the state where you live, you can expect to purchase a combination of PIP, liability, and uninsured motorist insurance. Not one state requires car owners to buy collision and comprehensive coverage. However, if you lease a car or take out a loan to finance the purchase of a motor vehicle, you might have to purchase a certain amount of collision and comprehensive auto insurance.

Collision insurance covers the costs associated with repairing the damage produced by your vehicle making an impact with a stationary object. For example, if you crash into a utility pole and the result is significant damage done to the front of your vehicle, collision coverage pays for the costs of repairing the front-end damage. On the other hand, comprehensive insurance coverage pays for car theft, as well as damage done to your vehicle as a result of fire, falling objects, and severe weather.

The depreciation rate for your automobile plays an influential role in answering the question, “Do I need collision insurance on an old car?” Depreciation represents a calculation that places a value on the difference between how much you paid for a car and how much the car is worth today. The value of motor vehicles decreases over time due to everyday wear and tear. For example, if you purchased a car four years ago for $30,000 and today the same car carries a Blue Book value of $15,000, your vehicle has depreciated by 50 percent.

Several factors come into play when determining the depreciation rate of a motor vehicle, but one factor always stays the same: New cars depreciate at a much faster rate than used cars. The moment when you drive a brand-new automobile off a dealership lot, the vehicle loses between nine and 11 percent of its original value. This means that by just turning on the ignition and running the engine for no more than a couple of minutes, your new car has lost a substantial percentage of its original value. Using our $30,000 example from above, the moment you leave a dealer’s sales lot, the car you just bought has diminished in value by around $3,000.

After one year, you can expect to lose about 20 percent of the price that you pay for a new car and after five years, the value of your once-new vehicle has declined by more than 60 percent. 

Although you do not have control over the rule that new cars depreciate faster than used cars, you can control several other factors to slow down the depreciation rate on a new motor vehicle. Mileage plays a significant role in determining a car’s depreciation rate. The more mileage you put on the odometer, the more a vehicle depreciates. If you plan on using a new car just to commute to and from work, you should retain more of the car’s value than if you buy a new car to drive you and your family across the country on vacations.

If you get involved in an auto accident that causes damage to your vehicle, the value of your car drops by several thousand dollars before you take it in for repair work. Shifting consumer preferences, reputation, and fuel economy all play a role in determining an automobile’s depreciation rate.

The standard rule for deciding when to drop collision coverage from your auto insurance policy is when a car reaches the five-year mark of operation or when a vehicle surpasses 100,000 miles. This is a simple rule to follow, but it might not apply to your particular case. For example, you have to consider the value of your car, how much you pay in an annual auto insurance deductible, and what other types of auto insurance coverage you have purchased. For example, an expensive car such as a BMW retains a higher value after five years or 100,000 miles than the value retained by a Nissan economy motor vehicle.

In general, the answer to the question, “Do I need collision coverage on my old car?” is no, but you should consult with an experienced personal injury lawyer from Morgan and Morgan to get the correct answer for your car’s age, make, and model.

Following a few time-tested steps should improve your chances of receiving compensation to recover the financial losses associated with an auto crash.

Call 911

Unless you get involved in a fender bender at a local store, you should call 911 right after a car accident. Calling 911 activates the emergency response system, which alerts both law enforcement personnel and emergency healthcare providers about the motor vehicle collision. The responding law enforcement officers secure the accident scene to prevent more crashes, as well as conduct a thorough investigation that leads to the submission of the official police report. Expect the first officer that interacts with you to request proof of insurance, which you should have stored in a convenient place inside your motor vehicle.

Receive Medical Treatment

Whether you leave the scene of the accident in the back of an emergency medical vehicle or travel to the nearest hospital on your own, you must receive medical care as quickly as possible after a car accident. If you feel healthy enough to remain at the scene of the auto crash to collect physical evidence and obtain the names and contact information of witnesses, you still need to seek medical care at some point on the same day of the vehicle collision.

The longer you wait to receive medical care, the more skeptical the insurance adjuster reviewing your claim becomes about the seriousness of your injuries.

Contact a Personal Injury Attorney From Morgan and Morgan

Before you notify your insurance company or the insurance company representing another party concerning the auto crash, you should first contact an experienced car accident lawyer from Morgan and Morgan. Unfortunately, far too many insurance companies take advantage of unsuspecting policyholders. If you do not get legal support to file an insurance claim, the adjuster assigned to your case might deny a valid claim or approve a claim for a value that falls well below what you deserve for compensation.

The car accident lawyer you retain from Morgan and Morgan for legal representation reviews the official police report, before conducting a separate investigation that includes gathering more physical evidence and interviewing additional witnesses.