When to drop collision and comprehensive insurance

 Key points

• Collision insurance pays for repairs to your vehicle if you hit another car or object, such as a tree or guard rail.
• Comprehensive insurance pays for car theft and damage to your car caused by vandalism, storms, floods, fire, falling objects and hitting an animal, such as a deer.
• Lenders and lessors typically require you to carry both comprehensive and collision coverage. If you don’t have a car loan or lease, this coverage is optional. 
• Consider your vehicle’s age and value when deciding if you should drop collision or comprehensive coverage.

Collision and comprehensive insurance can help you pay for damage to your vehicle following an incident, regardless of who is at fault. That can come in handy, especially if you drive a car that’s expensive to repair or if you don’t have room in your budget for unexpected bills. 

But should you keep your this coverage indefinitely? How do you decide if or when to drop collision insurance and comprehensive coverage? 

Here’s what you need to know to make the best car insurance decisions for your unique circumstances. 

Collision and comprehensive car insurance 

Collision and comprehensive car insurance are two types of coverage that are generally optional but may be required if you finance or lease your car. Both can help you cover the cost of vehicle damage or replacement (if totaled), but which type of coverage you turn to after an accident depends on the nature of the damage.  

• Collision insurance helps pay for damage to your vehicle caused by a “collision” with another object, such as another vehicle, utility pole or guardrail. It can also cover the cost of repairs associated with a rollover accident. 
• Comprehensive insurance is not truly comprehensive, but pays for vehicle damage caused by events such as flooding, fire, vandalism, theft, fallen trees or contact with an animal.

Both collision and comprehensive coverage carry a deductible, or the amount of money your insurer will deduct from your claim payout.  

For instance, let’s say a tree falls on your car and it will cost $4,000 to repair. If you have comprehensive coverage with a $500 deductible, your insurer will issue a check for $3,500. You’d be responsible for paying the remaining $500 for repairs.

When to drop collision insurance and comprehensive coverage

You may consider dropping collision or comprehensive coverage if: 

• Your vehicle’s value is low. If your car’s value has fallen below a few thousand dollars, it might be time to consider dropping collision and comprehensive coverage. That’s especially true if you have a high deductible, such as $2,000. At this point, an insurance payout may not merit the annual premiums. 
  
  For instance, if your vehicle sustains $2,500 in damages and you have a $2,000 deductible, your insurer will only pay out $500 after subtracting your deductible.  

• You can cover the cost of repairs on your own. Consider the value of your vehicle, the cost of repairs and your available funds. If you have enough in savings to cover potential repairs, you may want to drop one or both optional coverages. 

• You aren’t driving your car (collision only). Collision coverage helps pay for repairs if your vehicle hits something. If the car isn’t on the road, it’s very unlikely it will get into a collision. You only need comprehensive coverage for a vehicle that’s remaining parked. 
  
  Keep in mind that the same isn’t true for comprehensive coverage. Your car can still be damaged by covered issues, such as flooding, fires or falling objects. So while you may be able to drop collision insurance, you should consider keeping comprehensive coverage.

When to keep collision or comprehensive coverage

Even if your vehicle value is low, you may consider keeping these coverages if:

• You can’t afford expensive repairs. Collision and comprehensive coverage may increase your car insurance premiums, but the difference in cost may pale in comparison to what you’d need to pay should your vehicle be damaged in a collision or other type of accident. It may be worth keeping coverage to avoid having to pay out of pocket for unexpected damages. 

• You rent a car when you travel. Car rental companies typically offer a collision damage waiver that, when purchased, releases you from financial responsibility if the vehicle is damaged in a collision. If you are accustomed to opting out of this additional protection because you rely on your car insurance to cover you, consider keeping collision and comprehensive coverage or buying the waiver each time you rent. Without adequate insurance, if your rental car is wrecked, you’ll be on the hook to cover the loss. But check with your insurer first. Coverage varies by insurer, and not all policies cover rental vehicle damage.

How much does collision coverage cost?

The average cost of collision coverage is $814 annually, or $68 a month, according to our analysis of rates. How much you’ll pay for coverage will depend on several factors, including the insurer you choose, where you live and the vehicle you drive. 

Average cost of collision coverage by insurer

How much does comprehensive coverage cost?

The average cost of comprehensive coverage is $367 annually, or $31 a month, making it cheaper than collision coverage. Like collision insurance, the national average may not be indicative of how much you pay for coverage. Your rate will depend on several factors, like your age, vehicle, location and driving history. 

Average cost of comprehensive coverage by insurer

Can you drop one coverage and not the other?

Suppose you’re financing or leasing a vehicle. In that case, your lender or lessor will likely require you to carry both collision and comprehensive coverage. If you own your car the decision to drop one or both types of coverage is up to you. 

For instance, if your car is parked and not at risk of being damaged by another vehicle, you may want to consider dropping collision coverage and keeping comprehensive, which is cheaper and will help you cover the cost of repairs after natural disasters, vandalism or theft.  

On the other hand, if you only want repairs covered after a collision, but aren’t as worried about the instances that comprehensive insurance would help pay for, you could keep collision insurance and drop comprehensive coverage.