CompareNow Bots Tracking When to Drop Collision Coverage: We Run the Numbers

Should I Drop Collision Coverage? Here's How To Know

When to Drop Collision Coverage

You’ve raised your deductible. You’ve gotten dozens of insurance quotes online. And you still feel like you’re paying too much for car insurance. Maybe it’s time for a drastic step: getting rid of collision insurance. But are you ready for this gamble? We’ll help you figure out when to drop collision coverage for your car.

What is collision coverage, anyway?

Collision coverage is the part of your insurance policy that pays for damage to your own car. It comes in handy when:

  • You hit another driver. Their insurance company won’t pay for the damage, because it’s your fault.
  • Another driver hits you, but won’t admit fault. If you get into a legal battle, collision coverage can pay to fix your car while the matter’s being resolved.
  • You crash into a telephone pole (or a building, or a tree, or an inconveniently placed boulder.) You can’t sue a boulder, so you’re on the hook for the repair bill.

In order to have collision coverage, you typically must also have comprehensive coverage, which protects you from other covered mishaps that don’t involve collision. These include things like fire, natural disasters, hitting a deer, being struck by a falling tree and having your car vandalized or stolen.

Deciding when to drop collision coverage

Collision and comprehensive are optional parts of your policy — as opposed to liability insurance, which is usually mandatory and covers damage to other people’s property and injury to other drivers. If your car is brand new, however, your lender may require you to carry collision/comprehensive.

Should I Drop Collision CoverageThe best way to decide when to drop collision coverage is to run the numbers: specifically, how much you’re spending on collision/comprehensive, and how that compares to your vehicle’s value.

It’s easy when you get insurance quotes online on Compare.com! Let’s look at an example driver: a 30-year-old woman with a clean driving record who drives a 2010 RAV4. Her SUV is valued at around $11,000, according to the Kelley Blue Book. She opts for state-minimum coverage and a $250 deductible on collision/comprehensive and gets these quotes:

  • Company A: $864/year
  • Company B: $1296/year

Without collision/comprehensive coverage, her quotes drop to:

  • Company A: $468/year
  • Company B: $804/year

Saving $396 to $492 in a year is tempting… However, if she backs her RAV4 into a parked car, it could easily cost $6,000 or more to repair. Collision coverage pays for repairs up to the cash value of the car (after the deductible’s taken out) so it’s a smart buy. As the RAV4 ages and its value drops, collision may no longer be necessary.

When to drop collision coverage for an older car

Let’s say the same driver instead owns a 2001 Honda Civic. It’s dinged, it’s scratched, but it still runs — and it’s worth around $2,000. With comprehensive/collision coverage ($250 deductible), she gets these quotes:

  • Company A: $672/year
  • Company B: $744/year

If she drops collision coverage, the insurance quotes online change to:

  • Company A: $468/year
  • Company B: $576/year

Because her car’s so old, her savings are less: $168 to $204 in a year. But in this case, it could be wise for the driver to drop collision. If she were at fault in an accident, collision coverage would pay for repairs only up to the value of the car minus the deductible, or about $1,750. Is it worth repairing a car that wasn’t in great shape to begin with?

Honda CivicFinancial experts often say it’s smart to drop collision when you drive an old car, then put your car insurance savings in a fund earmarked for emergency repairs or buying a new car. However, when you’re trying to decide when to drop collision coverage, the answer really comes down to your personal finances. “If you’re not absolutely sure that you could deal with paying for repairs or completely replacing your vehicle at a moment’s notice, or else going without a vehicle until you could save for a replacement, it’s best to err on the side of caution and pay the extra premium for collision coverage,” The Simple Dollar advises.

What’s the upshot? The best way to decide is to run the numbers yourself on compare.com. It’s easy, fast and free, and you might find yourself saving even more than you expected.

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You could save up to 32% by using Compare.com!

Based on a survey of 100 California Residents. Average savings determined via a comparison of their selected policy against their self-reported annual premium.