Should You Drop Collision Insurance on Your Car?

Including collision insurance in your policy protects you from damages if you have a crash involving another vehicle or a stationary object. The coverage can save you money since you’ll receive reimbursement for the cost of repairs up to your policy’s limits after you pay your deductible.

If you’re still paying your car loan or leasing your vehicle, collision insurance offers a layer of protection. The same is true for an expensive sports car, which may cost more than a typical car to repair.

If you’re wondering when to drop collision insurance, you’ll want to consider the actual cash value of your car and your monthly budget. If the amount you pay for premiums is high and your car is cheap to repair or replace, canceling collision coverage may be a cost-effective decision.

• What Is Collision Insurance?
• When to Drop Collision Insurance
• How to Save On Your Insurance Premium
• Frequently Asked Questions

Collision insurance is a type of coverage that helps you pay for vehicle repairs or replacements if you are in a crash with another vehicle or an inanimate object, like a fence or a tree.

Having this coverage can be advantageous, especially if you are involved in a crash. It helps you cover repair or replacement costs due to those scenarios. Lending institutions typically require collision coverage if you’re leasing your vehicle or if you’re paying off a car loan as a way to protect their asset.

Collision insurance may increase your insurance rates, but having a deductible of at least $500 can help reduce your expenses. Collision coverage typically goes hand-in-hand with comprehensive insurance, and most insurers offer them together as part of a full coverage policy.

Knowing when to drop collision coverage insurance can help you protect your finances. Canceling collision insurance and getting cheaper car insurance may be the best direction to take in some situations, such as when you can afford to pay for repairs out of your pocket or if your car isn’t worth the cost to insure it.

While collision insurance may raise your premiums by at least $500, there are scenarios where keeping the coverage can help lower expenses in the long run. These include when you own an expensive vehicle or if you’re still financing your car. Keeping collision insurance may be a good idea if you live in a state with a high percentage of uninsured motorists.

If you decide collision insurance is a must, you will likely need to pay a higher premium. Fortunately, there are several other ways to save on insurance costs.

MoneyGeek lists five practical techniques you can use to reduce your car insurance premiums.