Use this decision matrix to determine whether keeping collision and comprehensive coverage is worthwhile for your situation.
Auto Insurance
When Should You Drop Collision and Comprehensive Coverage?
Updated: June 12, 2025
Advertising & Editorial Disclosure
Key Takeaways
Collision insurance covers your car's repair costs if you crash with another vehicle or a stationary object. It also reimburses up to your car's actual cash value (ACV).
Comprehensive insurance covers noncollision events like theft, vandalism, natural disasters and animal-related damage.
The law doesn't require you to have collision or comprehensive insurance, and you can use your car's ACV to decide whether to keep or drop these coverages.
When to Drop Comprehensive and Collision Coverage
Scenario | Vehicle Age | Financial Situation | Geographic Risk | Recommendation |
|---|---|---|---|---|
Vehicle worth less than $5,000 | 6–10 years | Any emergency fund | Low | Drop both |
Vehicle worth less than $5,000 | 10+ years | Any emergency fund | Medium/High | Drop collision, keep comprehensive |
Annual premiums exceed 10% of car value | 6–10 years | Strong emergency fund | Low/Medium | Drop both |
Annual premiums exceed 10% of car value | 10+ years | Any emergency fund | Any | Drop both |
Strong emergency fund (6+ months expenses) | 6–10 years | Excellent savings | Low | Drop both |
Strong emergency fund (6+ months expenses) | 10+ years | Excellent savings | Medium/High | Drop collision, keep comprehensive |
High-mileage vehicle (150,000+ miles) | 10+ years | Good emergency fund | Any | Drop collision, keep comprehensive |
Multiple vehicle household | 6–10 years | Good emergency fund | Any | Keep on primary car, drop on secondary |
Multiple vehicle household | 10+ years | Any emergency fund | Any | Drop on oldest vehicle |
Excellent driving record, low-risk area | 10+ years | Strong emergency fund | Low | Drop both |
Older luxury vehicle with expensive repairs | 10+ years | Any emergency fund | Any | Drop both |
Pre-retirement financial planning phase | Any age | Building retirement fund | Any | Consider dropping for premium savings |
Geographic Risk Assessment
- High risk: Tornado Alley (TX, OK, KS), hurricane zones (FL, LA, SC), mountain areas with severe weather, high-crime urban areas
- Medium risk: Moderate weather patterns, suburban areas, occasional severe weather
- Low risk: Stable weather regions, rural areas, garage parking, low crime rates
Decision Guidelines by Vehicle Age
- 0 to 5 years: Keep both coverages unless premiums are excessive (rare for newer cars).
- 6 to 10 years: Apply the 10% rule and consider your emergency fund strength.
- 10+ years: Most scenarios favor dropping collision; comprehensive depends on weather risks.
HOW TO DETERMINE A CAR'S ACTUAL CASH VALUE
Actual cash value (ACV) represents what your car was worth immediately before an accident, not what you paid initially.
Don't rely on one source:
- Kelley Blue Book: Conservative estimates, insurer preference
- Edmunds: Market-based pricing, often higher
- NADA Guides: Dealer valuations, middle ground
- Local listings: Check AutoTrader for actual selling prices
Key Value Factors
- Mileage: Every 1,000 miles over average reduces value by $200 to $400.
- Accident history: A clean record adds 10% to 15%; accidents reduce value by 10% to 25%.
- Vehicle condition: Excellent adds 10% to 20%; poor condition drops value by 20% to 30%.
Vehicle values vary by location, with high-cost areas like California and New York seeing values 15% to 25% above average. Low-cost regions in the Midwest and South run 10% to 15% below the national average. Insurance companies use valuation methods that may differ from retail prices by 10% to 20%, so document your car's condition with photos and maintenance records to support higher valuations during claims.
Do I Need Collision Insurance?
Collision insurance isn't legally required, but whether you need it depends on your situation. Use this decision framework to determine if collision coverage is right for you.
Decision Factor | Keep Collision Coverage | Drop Collision Coverage |
|---|---|---|
Vehicle age and value | The car is under 5 years old OR worth more than $5,000 | The car is over 10 years old AND worth less than $5,000 |
Loan/Lease status | Currently financing or leasing (required by lender) | Vehicle is paid off completely |
Emergency savings | Less than your car's replacement value saved | Emergency fund covers full vehicle replacement |
Risk tolerance | You want guaranteed repair coverage and peace of mind | Comfortable self-insuring against collision damage |
Driving environment | High-traffic areas, long commutes, harsh weather | Limited driving, low-risk rural areas, garage parking |
Quick Decision Test
Answer these three questions:
- Is your car financed or leased? If yes, you must keep collision coverage.
- Is your car worth more than $5,000? If yes, collision coverage makes financial sense.
- Could you afford to replace your car tomorrow? If not, keep collision coverage for financial protection.
If you answered "yes" to any question, collision insurance provides valuable financial protection. The 10% rule also applies: reassess whether the coverage remains cost-effective if annual collision premiums exceed 10% of your car's actual cash value.
Should I Have Collision Insurance on a 10-Year-Old Car?
Most 10-year-old vehicles don't justify collision coverage costs, but your car and situation matter more than age alone. The factors below can help you decide whether to keep or drop this coverage:
- 1
The 10% Rule for Older Cars
A good guideline is to drop collision coverage if your annual premium exceeds 10% of your car's current value. For example, if your 2014 sedan is worth $8,000 and your collision coverage costs $900 a year, you're paying 11% of the car's value — it's time to let it go.
- 2
Value by Vehicle Type
Not all 10-year-old vehicles depreciate the same way, so consider your vehicle type:
- Sedans: Typically worth $6,000 to $10,000. Collision coverage may not be cost-effective.
- SUVs: Often hold $10,000 to $15,000 in value, which can justify the coverage.
- Trucks: Usually retain $12,000 to $18,000 in value, especially work trucks in good shape.
- 3
Repair Costs vs. Coverage
Repair costs on older cars can quickly add up. Major repairs can be 50% to 70% of the car's value. For instance, a $4,000 transmission repair on an $8,000 car might mean your insurer declares it a total loss rather than fixing it.
ALTERNATIVE STRATEGIES
Consider these options instead of full collision coverage:
- Higher deductibles: Reduce premiums while keeping catastrophic protection.
- Comprehensive-only: Keep weather and theft protection, drop collision coverage.
- Regional factors: Maintain collision coverage in harsh weather areas or high-crime zones where claim likelihood increases.
Comprehensive Insurance Assessment for Old Cars
Comprehensive coverage often makes more sense than collision for older cars because weather, theft and vandalism risks don’t go away as your vehicle ages. Here’s a detailed look at why comprehensive coverage might be worth keeping and how it can protect your budget.
When You Should Keep Comprehensive Coverage
Deciding whether to keep comprehensive insurance on an older car comes down to a few key factors:
- Hail damage in Texas, Colorado and Nebraska costs $3,000 to $6,000 per claim.
- Flooding along the Gulf Coast and Florida can total vehicles worth $15,000+.
- Tornado Alley sees average wind and debris claims of $3,500.
- Glass damage: Windshield replacement costs $300 to $800 for any car.
- Animal strikes: Hitting a deer can cause over $4,000 in damage.
- Vandalism: Comprehensive covers keying, broken windows and graffiti removal.
Weather and Natural Disaster Risks
Hail, flooding, hurricanes and tornadoes can cause thousands in damage, no matter how old your vehicle is. For example:
Theft and Crime Risks
Older cars like Honda Accords and Toyota Camrys are still among the most stolen, regardless of age. Parking on the street increases theft risk by 40% compared to garage storage, making comprehensive coverage valuable in urban areas with high crime rates.
Comprehensive-Specific Scenarios
Comprehensive insurance covers risks that affect all vehicles:
Cost-Effectiveness of Comprehensive
Comprehensive insurance usually costs 40% to 60% less than collision for older vehicles. For example, on a 10-year-old car worth $8,000, comprehensive coverage might cost around $200 a year (just 2.5% of its value), compared to $400 for collision (5%). In severe weather states, comprehensive claims happen 2.5 times more often than collision claims, making it a worthwhile coverage.
The 10% Rule: When Coverage Costs More Than Value
The 10% rule helps you decide when collision and comprehensive premiums cost more than their protection value.
- 1
Find Your Car’s Value
Use resources like Kelley Blue Book (KBB), Edmunds or NADA Guides to look up the current market value of your car.
- 2
Calculate 10% of That Value
Take the market value you found and calculate 10% of that amount. This will be your “threshold” for what you should spend on coverage.
- 3
Compare Your Annual Premiums
Add up your annual collision and comprehensive premiums and see how they compare to the 10% threshold you calculated.
Example: Your car is worth $8,000. Calculate 10% = $800. If you're paying $900 annually for collision and comprehensive combined coverage, you're paying 11% of your car's value for coverage — consider dropping it.
If your premiums exceed the 10% threshold, dropping coverage often makes financial sense.
IMPORTANT CONSIDERATIONS FOR THE 10% RULE
Always use annual premiums, not monthly premiums. A $70 monthly premium equals $840 annually, which is significant for the calculation.
Don't use this rule if:
- Your car is financed or leased.
- You lack emergency savings for replacement.
- You live in severe weather or high-theft areas.
State-by-State Considerations When Dropping Collision and Comprehensive Coverage
Your state's weather patterns, uninsured driver rates and regulations impact whether dropping collision and comprehensive coverage saves you money.
High-Risk Weather States Where You Should Keep Coverage
Severe weather doesn't care about your car's age or value. Consider keeping coverage in these areas:
- Tornado Alley (Texas, Oklahoma, Kansas): Hail damage averages $4,000+ per claim.
- Hurricane States (Florida, Louisiana, North Carolina): Storm damage often totals older vehicles.
- Mountain States (Colorado, Wyoming): Winter conditions and wildlife strikes increase collision risk.
States With High Uninsured Driver Rates
When one in four drivers lacks insurance, dropping collision coverage becomes riskier: Florida (27%), Mississippi (26%), New Mexico (26%), Michigan (25%), Tennessee (24%).
Regional Repair Cost Impact
Where you live affects repair costs, changing the coverage math:
- High-cost states (California, New York, Hawaii): Repairs cost 20% to 40% more, making coverage more valuable.
- Low-cost states (Indiana, Iowa, Alabama): Lower repair costs make self-insurance more feasible.
State-Specific Insurance Requirements
Some states have unique requirements affecting your premium calculations:
- Kentucky: Motor vehicle reparations insurance affects coverage decisions.
- New York/Florida: Personal injury protection requirements may make collision or comprehensive coverage more affordable.
What Is Comprehensive and Collision Insurance?
Comprehensive and collision insurance help pay for damage to your car, but they cover different situations.
Collision insurance covers repairs or replacement if you crash into another car or object, such as a fence or tree. Comprehensive insurance covers noncollision events like theft, vandalism, fire or natural disasters.
Collision insurance may increase your rates, but choosing a deductible of at least $500 can reduce expenses. Collision coverage typically goes together with comprehensive insurance; most insurers offer them as part of a full coverage policy.
MONEYGEEK DICTIONARY
Collision insurance covers collisions in which a driver is at fault. Comprehensive insurance covers damage to your car from noncollision incidents like natural disasters, fire or theft.
The law doesn’t require you to have collision or comprehensive coverage.
How to Save on Your Car Insurance Premium
If you decide collision insurance is necessary, you'll likely pay a higher premium. Fortunately, there are several ways to save on costs.
Here are six practical ways to lower your car insurance premiums:
- 1
Raise your deductible
You pay the deductible out of pocket before your insurance kicks in. When you buy your policy, you can choose a deductible amount that works for you. A higher deductible usually means lower premiums.
- 2
Adjust your coverage and look for discounts
Insurance rates can vary a lot from one company to another, even for the same car. That’s why it pays to get quotes from several insurers online — you might find a better deal that fits your budget.
- 3
Bundle your auto and home insurance
Many insurance companies offer discounts if you bundle your auto and home insurance with them. Bundling these policies is an easy way to lower your overall costs.
- 4
Improve your credit score
Insurance companies consider several factors when setting premiums, including your credit score. Drivers with good to excellent credit get much lower premiums than those with poor credit. Improving your credit score will take time, but it can substantially lower your car insurance costs.
- 5
Take a defensive driving course
Safe drivers typically pay lower premiums. Some insurers offer discounts if you voluntarily complete a defensive driving course. Check which traffic schools your insurance company approves and take a course through one of them to get the discount.
- 6
Pay in full
Many insurers offer discounts if you pay your premium upfront and in full. Although no-down-payment car insurance lets you start with a lower upfront cost, paying in full can save you money in the long run.
When to Drop Comprehensive and Collision Coverage: Bottom Line
Deciding whether to drop collision and comprehensive coverage depends on your car's actual cash value (ACV) and financial situation. If your car's ACV is low and the cost of these coverages exceeds 10% of its value, it makes sense to drop them. But if you're financing or leasing your car, you'll likely be required to keep them. Use the decision factors above to determine whether keeping or dropping these coverages is right for you.
Do You Need Comprehensive and Collision Coverage: FAQ
Deciding when to drop collision and comprehensive coverage depends on your car's value and insurance costs. This section answers common questions to help you make the right choice.
Should I drop collision insurance on a 10-year-old car?
Yes, if your car is worth less than $5,000 or annual collision premiums exceed 10% of the vehicle's value. However, keep it if you can't afford replacement costs or live in high-accident areas.
What happens if I drop comprehensive insurance?
You won't have coverage for weather damage, theft, vandalism or animal strikes. You'll pay out of pocket for these incidents, ranging from $500 for minor hail damage to total loss from flooding.
How much will I save by dropping collision coverage?
Collision coverage typically costs $300 to $800 annually, depending on your car's value, location and driving record. Savings vary, but most drivers save 30% to 50% on their premiums by dropping collision coverage.
Is the 10% rule for car insurance accurate?
The 10% rule provides a solid starting point for decision-making. If annual collision and comprehensive premiums exceed 10% of your car's actual cash value, coverage likely isn't cost-effective for most drivers.
When is collision insurance not worth it?
Collision insurance isn't worth it when your car is worth less than $5,000, you have substantial emergency savings or repair costs would likely exceed the vehicle's value in most accident scenarios.
Should I keep comprehensive but drop collision?
Yes, this strategy works well for older cars in weather-risk areas. Comprehensive costs less than collision and covers risks that don't decrease with vehicle age, like hail, theft and flooding.
Do I need collision insurance if my car is paid off?
No legal requirement exists for collision coverage on paid-off vehicles. Your decision should be based on the car's value, financial situation and risk tolerance rather than loan status.
What's the difference between dropping collision vs. comprehensive?
Dropping collision eliminates coverage for accidents you cause, and dropping comprehensive eliminates protection against weather, theft and vandalism. Comprehensive often provides better value on older vehicles.
Comprehensive and Collision Coverage: Our Review Methodology
MoneyGeek gathers car insurance data from various providers and independent agencies. Our analysis also includes consumer analytics and provider ratings from trusted sources, such as:
- J.D. Power: A respected consumer research agency that ranks and reviews customer satisfaction in the insurance and personal finance industries
- AM Best: A credit rating agency that evaluates insurance companies' financial strength
- Quadrant Information Services: A leading provider of comparative data for pricing analytics in property and casualty insurance
- National Association of Insurance Commissioners (NAIC): A regulatory body offering expertise and data analysis to protect consumers and regulate the insurance industry
Our content also benefits from insights from industry professionals and academics in insurance, personal finance and other fields. Our expert team includes:
- Zach Shefska: Founder and CEO, Your Auto Advocate
- Kalinda Ukanwa, MBA, Ph.D.: Assistant Professor of Marketing, University of Southern California
- Karen Gordon Mills: Senior Fellow at Harvard Business School, an expert in U.S. competitiveness, entrepreneurship and innovation
At MoneyGeek, your needs are a priority. Our editorial process includes research, fact-checking and a thorough review to ensure the accuracy and credibility of our content.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.
sources
- Kelley Blue Book. "Total Cost of Ownership Car Calculator." Accessed June 12, 2025.