You must obtain specific vehicle insurance coverage if you own a car. Depending on your state, you’ll need liability car insurance, uninsured motorist coverage, and maybe personal injury protection.
Collision and comprehensive coverage are vital insurance categories that should not be overlooked, even if they are not required in every state. If you have a car loan or lease, they are probably required. This is mainly for the protection of the lender or leasing firm.
Collision insurance protects your car from damage caused by a collision with an item like a pole, guard rail, or tree. It is essential indeed, but you need to know when dropping car collision coverage is necessary to save your money.
Dropping Car Collision Coverage
The conventional rule is to discontinue collision coverage when a car is five or six years old. Some say it is when the mileage hits 100,000 miles.
It now relies on the car’s value and replacement parts, though. For several years longer, a Mercedes may be worth the expense of collision coverage than a Nissan Sentra. Furthermore, replacing components may be so expensive that the deductible exhausts faster.
Older autos have their calculation since they’re still operable but have lost a large amount of value due to depreciation. When insuring these vehicles, it makes sense to eliminate collision coverages. That’s because your maximum payout—the car’s worth less deductible—will almost definitely be insufficient to cover your insurance payments over time.
Advice for Long-time Car Users
Consider the cost of collision and comprehensive insurance over some years vs. your maximum insurance premium. This is if you intend to keep your car on the road for more than a decade. When your expense over five years exceeds the feasible insurance premium, collision coverage is likely not worth it.
At this point, you should consider dropping it.
