Becoming an Adult

When To Drop Collision Coverage

1 February 2023

Robin King

Shopping for an auto insurance policy involves finding a reliable insurance company and getting sufficient coverage. You must also check your finances and weigh your vulnerability to certain risks. In some cases, the cost of collision coverage outweighs the benefits. Here are scenarios where you are better off dropping collision coverage.

You Have a Good Driving Record

You should consider dropping collision insurance if you have paid off your vehicle and haven't had an accident in many years. Additionally, if you don't drive often, your risk of being involved in a collision is reduced.

It doesn't make sense to pay for collision insurance if your vehicle is mostly in storage. In this case, you are better off with comprehensive coverage because it covers theft, natural disasters, fallen objects, and weather-related accidents. You don't have to be driving to encounter any of these incidents. However, with collision coverage, the less time you spend driving, the lower your risk of being in an accident. 

Collision Premiums Are More Than Your Car's Actual Value

The actual value of your car is determined by several factors. These are wear and tear, mileage, history of collision, and your vehicle's make, model, and date of manufacture.

Calculating the actual value of your car will help you determine whether to drop collision coverage. If the combined cost of your collision premiums and deductible is more than your car's actual value, you should skip the collision coverage.

You Can Afford to Pay for Car Repairs

Many drivers don't buy collision coverage for old cars. This is because it is cheap to repair or replace old vehicles. Remember, every insurance claim is likely to increase your premiums. Therefore, if you can pay for repairs out of pocket, there is no need to make a claim. Furthermore, if the cost of repairs is less than your deductible, it doesn't make sense to have collision coverage.

You Plan on Replacing Your Car

If you plan on replacing an old car, there is no need to buy collision coverage. Instead, you can save this money to buy insurance for the new vehicle. However, this will depend on how often you use the car and your driving record. Suppose you are prone to accidents and cannot afford repairs for the old vehicle. In that case, collision coverage is necessary, provided the premiums and deductibles are less than the car's actual value.

In Closing

You should consult an auto insurance agent when deciding whether to drop collision coverage. The agent will help you buy sufficient coverage and give you the pros and cons of different policies. This will make it easier to determine the coverage you need and what you can do without.

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