Drop collision insurance when your car's value falls below $5,000 and you have six months of emergency savings. Three factors guide this decision: your vehicle's actual cash value, available emergency funds and annual premium costs. Dropping collision typically saves $400 to $800 per year, which you can redirect toward savings or other coverage needs.
When to Drop Collision and Comprehensive Coverage
Updated: October 7, 2025
Advertising & Editorial Disclosure
Key Takeaways
Drop collision insurance if your car is worth under $5,000 and you have 6+ months of emergency savings to replace it out-of-pocket.
Drop collision insurance when your car is over 10 years old, worth less than $5,000, or when annual premiums exceed 10% of your vehicle's value. However, you must keep it if you're financing or leasing your vehicle.
Drop collision insurance first while keeping comprehensive coverage—comprehensive costs 40-60% less and protects against weather, theft, and animal strikes that don't decrease as your car ages.
Should I Drop Collision Insurance?
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 |
Should I Drop Collision or Comprehensive Insurance First?
First, drop collision insurance while keeping comprehensive coverage. Collision covers at-fault accidents you cause, while comprehensive protects against unavoidable risks like hail damage, theft, and animal strikes—risks that remain constant regardless of your vehicle's age.
Comprehensive coverage costs 40-60% less than collision ($367 vs $814 annually), providing better value for older vehicles. Your driving skills may improve over time, reducing collision risk, but weather patterns and theft rates in your area don't change as your car ages. Match your situation to the scenarios below to determine whether you should drop collision, comprehensive, or both coverages makes sense for your specific circumstances and location.
Vehicle’s age and value | The car is under five years old or worth more than $5,000 | The car is over 10 years old and worth less than $5,000 |
Loan or lease status | The car is financed or leased (coverage usually required) | The car is fully paid off |
Emergency savings | You don’t have enough saved to replace your car | You can afford to replace your car out-of-pocket |
Risk tolerance | You prefer financial protection and peace of mind | You’re comfortable taking the risk of paying for repairs |
Driving habits and exposure | You drive often in high-traffic, accident-prone or harsh-weather areas | You drive infrequently or in low-risk, local environments |
WHAT HAPPENS AFTER YOU DROP COLLISION COVERAGE
Knowing what happens after you drop collision insurance helps you prepare for the shift in financial responsibility. Your insurance no longer covers damage to your vehicle from accidents you cause or single-vehicle collisions. If you hit another car, a tree, or a guardrail, you pay all repair costs out-of-pocket. Your liability coverage still covers damage you cause to other vehicles and property—only damage to your own vehicle is no longer covered.
Comprehensive coverage remains active if you kept it, providing protection against theft, vandalism, weather damage, and animal strikes. Your liability coverage continues to protect you if you cause injury or property damage to others. You've only eliminated the collision portion, not your entire policy.
Should I Drop Collision and Comprehensive Insurance Coverage?
First, drop collision insurance while keeping comprehensive coverage. Collision covers at-fault accidents you cause, while comprehensive protects against unavoidable risks like hail damage, theft, and animal strikes, which remain constant regardless of your vehicle's age. Your driving skills may improve over time, reducing collision risk, but weather patterns and theft rates in your area don't change as your car ages. Find your scenario below to help you decide if you need collision and comprehensive coverage, if you should keep both, or drop one.
Exposure to weather risks | You live in an area prone to hail, flooding, hurricanes or wildfires | Your area has stable weather with low risk of natural damage |
Vehicle theft risk | Your car is parked on the street or in a high-crime area | You park in a secure garage and live in a low-crime area |
Vehicle’s ACV | The car is still worth more than $5,000 | The car is worth less than $5,000 |
Emergency savings | You can’t easily afford out-of-pocket replacement after theft or damage | You have enough savings to self-insure against these losses |
Animal and vandalism risk | You drive through rural areas or have had prior animal or vandalism claims | No history or likelihood of animal strikes or vandalism |
How to Decide if You Should Drop Collision Insurance
The key is recognizing when premiums exceed the realistic benefit you'll receive. When your car's value drops below the point where insurance payouts justify the cost, dropping coverage strategically can save you money as you transition to self-insurance. The 10% rule offers a clear mathematical threshold for making coverage decisions, and understanding why this percentage matters helps you use it confidently. Follow the method below to determine if canceling collision insurance is a wise money-saving move.
Coverage Assessment Guidelines
- Car value under $5,000: Consider dropping both collision and comprehensive.
- Collision premium ÷ Car value exceeds 10%: Consider dropping collision coverage immediately.
- Emergency fund covers more than 6 months of expenses: Consider dropping both coverages.
- Financing or leasing your vehicle: Keep both (lender requirement).
Geographic Location Guidelines
- High-risk States (TX, OK, KS, FL, LA, SC, mountain/urban areas): Keep comprehensive longer due to weather and theft.
- Medium-risk States (moderate weather, suburban areas): Apply standard 10% rule guidelines.
- Low-risk States (stable weather, rural areas, garage parking): Consider dropping coverage earlier with confidence
Decision Guidelines by Vehicle Age
- 0-5 years: Keep both coverages (high value justifies protection).
- 6-10 years: Apply 10% rule and assess emergency fund strength.
- 10+ years: Drop collision in most cases; keep comprehensive only in high-risk areas.
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.
When to Drop Collision Insurance by State: Geographic Considerations
State requirements greatly influence collision insurance choices. Kentucky requires motor vehicle repair insurance that can overlap with collision coverage. New York and Florida mandate Personal Injury Protection (PIP), increasing premiums by $300-$800 annually. These mandatory costs make optional collision coverage less justifiable for older vehicles, especially when combined premiums exceed your budget.
Dropping Collision Coverage: Buying Guide
Collision insurance costs $400 to $800 annually—money you could save when your vehicle no longer justifies the coverage. This guide explains what comprehensive coverage protects, when to drop collision insurance based on your vehicle's age and value, and how dropping coverage lowers your premiums without leaving you underinsured.
What Is Comprehensive and Collision Insurance?
Collision insurance pays for damage to your car when you hit another vehicle or object. This includes backing into a pole in a parking lot, sideswiping a guardrail, or colliding with another car (regardless of fault). Your collision coverage pays for vehicle repairs up to its actual cash value, minus your deductible. If you cause an accident by running a red light and total your car, collision coverage handles your vehicle repair or replacement even though you're at fault.
Comprehensive insurance pays for damage from non-collision events. Theft, vandalism, fire, flooding, hail, falling tree branches, and animal strikes all fall under comprehensive coverage. Comprehensive coverage pays for repairs if someone keys your car, smashes your windows, or steals your catalytic converter. When a deer runs into the road and destroys your front end, comprehensive (not collision) coverage covers the damage.
Comprehensive coverage costs 40-60% less than collision because comprehensive claims tend to be smaller and less frequent in most regions. However, in severe weather states like Oklahoma or hurricane zones like Louisiana, comprehensive claim frequency exceeds collision claims, and the coverage provides exceptional value even on older vehicles.
How to Lower Your Car Insurance Premium by Dropping Collision Coverage
Contact your insurance company, ask to remove collision coverage from your policy, and get written confirmation of your new premium. Your savings usually start right away, often prorated from the date you cancel coverage. Keep comprehensive and liability coverage when dropping collision to stay protected against theft, weather damage, and liability for injuries you cause.
- 1
Verify You Meet the Requirements
Before dropping collision coverage, confirm that your vehicle is paid off and free of any outstanding loan or lease. Lenders require collision coverage until you fully own the vehicle. Check your loan payoff status and ensure no lienholder appears on your vehicle title. If you're still making payments, you cannot drop collision coverage, regardless of the vehicle's value.
Make sure you have enough emergency savings to replace your vehicle if needed. Financial advisors suggest having at least 6 months of living expenses saved before self-insuring. Calculate whether you can comfortably cover your vehicle's replacement cost without experiencing financial hardship.
- 2
Calculate Your Exact Savings
Review your current insurance declaration page to identify your collision coverage premium. This appears as a separate line item, usually $600-$900 annually for older vehicles. Do not confuse this with your total premium—you're only removing the collision portion.
Request a quote from your insurer showing your premium without collision coverage. Most insurers provide instant quotes online or over the phone. Compare your current premium to the new premium to verify the exact savings. A driver paying $1,800 annually with $750 in collision coverage would pay $1,050 after eliminating collision—resulting in $750 in annual savings
- 3
Contact Your Insurance Company
Contact your insurance agent or company directly to request removal of collision coverage. Alternatively, log into your online policy management portal, where most insurers allow coverage adjustments. Specify that you want to remove collision coverage while keeping comprehensive and liability coverage.
Ask for the change to take effect immediately for maximum savings, or choose a future date if you prefer. The company will calculate a prorated refund if you've prepaid premiums. For example, a driver who paid $1,800 for six months ($300/month) and drops $750 in collision coverage with three months remaining would get a $187.50 refund ($750 ÷ 6 months × 3 months).
- 4
Verify Your New Policy Documents
Review your updated declaration page carefully when it arrives. Confirm that collision coverage no longer appears in your coverages list. Verify your new premium amount matches the quote provided. Check that comprehensive and liability coverage remain unchanged with the same limits and deductibles.
Ensure your new policy reflects the correct effective date for the coverage change. If anything appears incorrect, contact your insurer immediately for correction. Keep both your old and new declaration pages for your records.
- 5
Adjust Other Coverage as Needed
With collision coverage removed, consider increasing your comprehensive deductible to further lower your premiums. Raising your comprehensive deductible from $500 to $1,000 can save an extra $100-$200 annually. This strategy makes sense for financially stable drivers who can afford the higher deductible.
Think about whether to raise your liability limits with the savings from dropping collision coverage. Upgrading from the state minimum liability coverage ($25,000/$50,000/$25,000) to more comprehensive coverage ($100,000/$300,000/$100,000) costs $150-$250 a year—less than the $700-$900 you save by removing collision. This approach offers vital asset protection while still helping reduce your total premium.
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 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.
When to Drop Comprehensive and Collision Coverage: Bottom Line
Drop collision and comprehensive coverage when your vehicle's actual cash value drops below $5,000, annual premiums exceed 10% of your vehicle's value, and you have enough emergency savings to self-insure. For most drivers, this happens when vehicles are over 10 years old or have more than 100,000 miles. However, if you're financing or leasing, you must keep both coverages as your lender requires.
Apply the 10% rule to your vehicle's current value, assess your emergency fund, consider your geographic risk factors, and review your driving record before making your final choice.
The average driver saves $814 annually by dropping collision and $367 by dropping comprehensive, totaling $1,181 in yearly savings for older vehicles. These savings grow significantly over time, especially for drivers with multiple older cars or maintaining coverage on secondary vehicles with minimal use.
Whether you choose to drop coverage or keep it, regularly compare quotes from multiple insurers to ensure you're getting the best rates for your coverage level.
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.
When should I drop collision insurance?
Drop collision insurance when your car is worth less than $5,000, annual premiums exceed 10% of your vehicle's value, or you have sufficient emergency savings (6+ months of expenses). Most drivers drop collision when their vehicle reaches 10 years old or 100,000 miles. However, if you're financing or leasing, you must keep collision as your lender requires.
How do I know when to drop collision insurance?
You know when to drop collision insurance by applying the 10% rule: divide your annual collision premium by your car's actual cash value. When the result exceeds 10%, it's time to drop coverage. Additionally, drop collision when your vehicle is worth under $5,000, you have 6+ months of emergency savings, or you can afford out-of-pocket replacement. Most drivers reach this point at 10 years/100,000 miles.
Should I drop collision insurance on a 10-year-old car?
Drop collision on a 10-year-old car if it's worth less than $5,000 or annual premiums exceed 10% of its value. However, 10-year-old trucks and SUVs often retain $10,000-$20,000 in value, making collision coverage cost-effective. Calculate specifically for your vehicle: annual premium ÷ car value = percentage. Above 10% suggests dropping coverage. Consider your emergency fund strength, driving record, and whether you can afford out-of-pocket replacement before deciding.
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.
When should you drop full coverage on a car?
Drop "full coverage" (collision + comprehensive) when your car's value falls below $5,000 and you can afford replacement costs. However, never drop liability coverage—it's legally required. You can drop collision and comprehensive together or separately. Consider keeping comprehensive even on older vehicles if you live in high-weather-risk or high-theft areas, as it costs 40-60% less than collision and protects against uncontrollable events.
Do I need comprehensive and collision coverage?
You need comprehensive and collision coverage if you're financing or leasing your vehicle—lenders typically require it. If you own your car outright, you "need" these coverages if you can't afford to replace your vehicle out-of-pocket. Comprehensive and collision are optional by law but valuable for newer vehicles or drivers without significant savings. Most drivers can skip these coverages and self-insure for older cars worth under $5,000 with substantial emergency savings.
Do you need comprehensive and collision coverage?
Comprehensive and collision coverage aren't legally required. Still, they're financially necessary if: (1) your vehicle is worth more than $5,000, (2) you lack emergency savings for replacement, (3) you have a car loan/lease, or (4) you drive a high-value vehicle. Most drivers can safely drop coverage and self-insure for older cars worth under $5,000 with adequate emergency savings and low-risk profiles.
Should I drop collision and comprehensive insurance?
Drop both collision and comprehensive if your car is worth under $5,000, you have emergency savings for replacement, and you live in a low-risk area (stable weather, low theft). Drop collision but keep comprehensive if you live in high-weather-risk areas (tornado alley, hurricane zones) or high-crime areas, as comprehensive costs less and covers risks that don't decrease with vehicle age. The decision depends on your vehicle value, financial situation, and geographic risk factors.
How much is comprehensive insurance?
Comprehensive insurance averages $367 per year nationally, but varies by state, vehicle, and driver profile. It typically costs 40-60% less than collision coverage ($814 average). In severe weather states like Oklahoma or Texas, comprehensive may cost $500-$700/year due to higher claim frequency, while stable climate states average $250-$350/year. Get personalized quotes to determine your exact cost based on your specific situation.
What is collision and comprehensive insurance?
Collision insurance pays for damage to your car when you hit another vehicle or object (tree, guardrail, pole). Comprehensive insurance pays for damage from non-collision events: theft, vandalism, weather (hail, flooding), fire, and animal strikes. Both have deductibles and pay up to your car's actual cash value. Neither is legally required, but lenders typically require both for financed vehicles. Comprehensive covers events outside your control, while collision covers accident damage.
When to drop comprehensive coverage?
Drop comprehensive coverage when you live in a low-risk area (stable weather, low crime), your car is worth under $5,000, and you have emergency savings. However, comprehensive often remains valuable longer than collision because it covers risks that don't decrease with vehicle age (weather, theft) and costs significantly less (average $367/year vs. $814 for collision). In high-weather-risk states or urban areas with elevated theft, maintain comprehensive coverage even on older vehicles since the low cost justifies the protection.
Comprehensive and Collision Coverage: Our Review Methodology
MoneyGeek gathers car insurance data from various providers and independent agencies. Our analysis 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 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.
Collision and Comprehensive Insurance: Related Articles
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 August 3, 2025.