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by Anne Burger on Aug 14, 2014

Most people purchase comprehensive and collision coverage as part of their auto policies. However, as our vehicles age, sometimes it makes sense to skip these coverages. But how do you know when it’s time to drop the coverage?

Understand the Coverages

Collision coverage covers you for damage to your vehicle caused by colliding with other objects, typically another vehicle, building, or other structure.

Comprehensive coverage covers you for damage to your vehicle caused by accidents or perils other than collision. Examples include damage from fire, hail, or a falling tree.

Recognize the Benefits

These coverages insure your physical vehicle. With out these coverages, if your vehicle is damaged, you will be responsible for paying to fix your vehicle out of your own pocket. If your vehicle is a total loss, then you will have to purchase a new vehicle with out the help of your insurance policy.

Weigh the Drawbacks

It is important to know that most insurance policies only insure vehicles for their depreciated value. This is typically referred to as the “Actual Cash Value”. While a new vehicle may be worth $20,000, an older vehicle may be worth only a few thousand dollars. It is important to have an idea of the value of your vehicle so it can help you determine if it makes sense to keep the coverage. To help you learn the value of your vehicle, you can run your make and model through the Kelley Blue Book (KBB) or AutoTrader.

Once you have an idea of the value of your vehicle, you must also factor in the deductible and the premium you are paying for comprehensive and collision coverage. If the vehicle is worth $1,000, but your deductible is $500 and the premium is $750 per year, then it probably does not make sense to keep the coverage. 

Make a Decision

At the end of the day, you're the only one who can decide if collision and comprehension coverage is best for you and your vehicle. Hopefully this guide will help you to understand your options and make a judgment call. If you have any questions, please contact us!

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