Wondering if it’s time to remove collision coverage from your car insurance policy? Collision insurance covers damage to your vehicle if you collide with another car or object. While it provides valuable protection, you may reach a point when dropping collision makes financial sense.
What Does Collision Insurance Cover?
Collision coverage pays for repairs or replacement if you cause an accident that damages your vehicle. Common examples include:
- Hitting another vehicle
- Crashing into a building, tree or pole
- Rolling your vehicle
- Hitting potholes or curbs
Collision protects your car regardless of who caused the accident. Without it, you’d pay those repair bills yourself.
When Can You Drop Collision Coverage?
Dropping collision is optional for vehicles you fully own. But first consider:
Your Car’s Value
If your car is only worth a few thousand dollars, collision premiums may cost more than the payout you’d receive from a total loss. Calculate your car’s value minus your deductible to determine the maximum claim amount.
For example, if your car is worth $2,000 and your deductible is $1,000, the insurer would pay just $1,000 at most. The premium savings could outweigh that amount.
How Much You Drive
The more miles you drive, the more your collision risk increases. If your car spends most days sitting in the garage, dropping collision may work. Just be sure to add it back on before a long road trip.
Claim History
Multiple not-at-fault and at-fault collision claims can increase your premiums over time. If you have a clean history, you may feel comfortable without collision.
Emergency Fund
Without collision insurance, you must pay all repair bills after an at-fault accident yourself. Be sure you have savings to cover potential costs before removing coverage.
When Should You Keep Collision Insurance?
Certain situations require keeping collision protection:
Financed or Leased Vehicles
Lenders and leasing companies almost always require collision coverage to protect their investment in your car. You cannot remove this coverage until the loan or lease is paid off.
New Cars
Brand new cars depreciate quickly. But collision makes sense for the first few years to guard against repair bills exceeding the car’s value.
Expensive Vehicles
Luxury and sports cars hold higher values longer. Their parts and complex systems also cost more to fix. Carry collision coverage for as long as possible on pricier rides.
Areas With High Accident Frequency
Densely populated metro areas see more accidents per capita than rural regions. The collision risk could outweigh premium costs depending on where you live.
Teenage Drivers
Teen accident rates are triple that of more experienced drivers. Adding your teenager to your policy will automatically increase collision premiums. But it’s worth the cost to cover their inevitable fender benders until they turn 25.
The Bottom Line
Here are key questions to ask when considering dropping collision insurance:
- What is the current value of my vehicle?
- How much is my chosen collision deductible?
- What premium would I save annually without coverage?
- Can I afford major repairs if I cause an accident?
Carefully compare potential savings against the risks. And speak with your insurance agent before making any final decisions.
FAQs
Can I drop collision and keep comprehensive coverage?
Yes, collision and comprehensive provide different protections. Comprehensive covers non-collision damage from weather, theft, vandalism, falling objects, explosions and more. It’s fine to keep one while dropping the other.
If I remove collision, what happens if I total my car?
Without collision insurance, you receive no payout if your car is totaled in an at-fault accident. You must then either repair the vehicle entirely out-of-pocket or purchase a different car. Be prepared for this worst-case scenario before dropping coverage.
How much does dropping collision save on average?
Collision typically costs $400-$1,000 per year depending on your car’s make, model and age. Dropping it can provide significant annual savings over time, especially on older vehicles. Crunch the numbers to see if giving it up makes sense.
Can I get collision insurance again later if I drop it?
Yes, you can add collision coverage again at any time by contacting your provider. There is usually no penalty or waiting period to re-add after a lapse. Notify your insurance company at least several days before your next policy renewal for a smooth transition.
Does my insurance go up if I drop collision then add it back?
In most cases, voluntarily removing then adding back collision does not increase your rates. However, gaps in coverage could negatively impact your claim history if you cause an accident during the lapse. This would likely lead to higher premiums when re-adding collision down the road.
