Car insurance is one of those things you must have. Not only is it legally required, but it also offers protection for vehicle damage due to a collision with another vehicle or object.
Because car insurance can be expensive, keeping costs down may involve dropping full coverage on your vehicle.
While collision insurance is a must for new, leased, expensive, or vintage vehicles, there are circumstances when it may make more sense to drop the coverage.
When is it a good idea to drop collision coverage?
Older Vehicle with High Mileage
The older your vehicle and the more miles on it, the less valuable it is.
When the cost of insurance is equal to or more than the cost of a payout in the event of an accident, you may want to consider dropping collision insurance.
To determine whether the cost of collision insurance is worth keeping for an older vehicle, look at your current annual insurance premiums. If you’re paying 10% or more of your car’s value for collision coverage each year, you should consider dropping the coverage.
Ability to Pay Out-of-Pocket
If you are in a position to pay for repair out-of-pocket rather than filing an insurance claim, you may consider dropping collision insurance.
Stash the extra money saved on paying for collision insurance in a car repair savings account and build a fund toward financing unforeseen collision repair costs.
On the other hand, keeping collision insurance could save you from paying expensive bills in the event that you don’t have an emergency fund or savings to pay for the repairs.
Vehicle Replacement
If you know that you will replace the vehicle in the event of collision damage, collision insurance may not be a good investment for you.
Minimal Mileage
If you put minimal miles on your vehicle each year, you may consider dropping collision insurance. Statistically, the less you drive, the less likely you are to be involved in a collision.
Collision Coverage Considerations
Minimum insurance coverages vary, always check with your insurance agent for specifics in your state.
Full coverage typically includes both comprehensive coverage for protection from incidents like theft, weather-related damage, or vandalism. Collision coverage offers protection from strictly collision-incurred damage.
You can also check with your agent on ways to lower your auto insurance premiums while keeping collision coverage. One way to lower full coverage costs is to raise the deductible for collision coverage.
Conclusion
The decision to drop collision coverage requires some thought and weighing the pros and cons of doing so. A conversation with your insurance agent can help make the decision easier.
For repair of your vehicle due to either comprehensive or collision damage, contact the experts in collision repair at Downtown Collision in Santa Rosa.