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Originally Posted by Wetzel
I don't understand this. Why would the insurance not pay me if the car is wrecked? I would certainly want them to cover the damage to my car and whatever I wrecked into, regardless of if I or the bank owns it.
Wetzel
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Two types of insurance, comprehensive and collision, insure your car against things not involving other drivers: if you wreck your own car, if your car is stolen, if you set it on fire while messing with a 1000 W amp in the trunk... then C&C insurance gives you the blue book value of the car when its totaled.
If you dont have "C&C" coverage and someone else damages your car, then they have to pay for the damages (covered by their liability insurance).
If you dont have C&C and you wreck your own car, or you leave your keys in it and it is stolen, or you screw up repair work and the engine catches fire... then you have to pay for your own mistakes.
I think this is the better path for new drivers, older (less expensive car) and no C&C - it puts the responsibility on your own shoulders, and for most people it means if you do something stupid and wreck your own car, you will be using public transportation for the next year or so. When you know that if you wreck your car nobody is going to buy you another one, you tend to be a little more carefull.
If you buy a car with a loan, then the bank will require you to have C&C insurance, so the loan will be paid if the car is destroyed.
If you work out the rates, the amount you pay for C&C on your car will usually pay for a brand new car every 10 or 12 years, which means if you saved that money or invested it, instead of giving it to your insurance company, then every 12 years or so you will have enough cash to buy a new car (if you do total one eventually).
Statistically only one in four people will have a serious car accident during their lifetime. If the other 75% have C&C coverage they are handing the insurance companies a ton of money.