Is It Still Worth Carrying Collision or Comprehensive Car Insurance?

Most new car buyers decide on going with "full coverage" before they even drive it off the lot. If the vehicle is leased or financed, then collision and comprehensive protection may have been required. Such insurance is made mandatory in these situations because the lender wants their collateral to be covered.

But after a few years of wear and tear, you may want to reconsider paying the higher costs of collision or comprehensive insurance. If you are still paying off the vehicle, then you should keep your car fully insured, especially since it probably has low miles and a high resale value.

Drivers of older, less valuable vehicles should take a closer look at their insurance policies and see if there are more cost effective options. Before dropping collision or comprehensive coverage from your plan, find out how much your vehicle is worth. You can use an internet pricing guide, like the one on the Kelley Blue Book website, or browser through some local auto advertisements to see how much other people are asking for your car.

Think about the replacement cost here, or how much you would have to spend to replace your vehicle if it were stolen or totaled in an accident. Do you have the money available to buy a new car if this were to happen? If the answer is no, then you should keep your current coverage.

Next, examine a breakdown of your current insurance premium charges and look for how much you are paying for collision and comprehensive protection. Combine those numbers and figure out how much you pay annually for this coverage. For instance, if you pay $300 for this coverage every six months, double that amount for an annual total of $600.

Insurance statistics show that the average driver files a claim once every five to six years. Drivers who experience accidents or get tickets file claims more often. Using a six year average, multiply the amount you pay for increased coverage ($600) by six years and you get a total of $3,600. This means that you spend $3,600 every five years for collision and comprehensive insurance. If the car you drive is not worth the $3,600 you pay in premiums, then it’s not worth carrying the coverage.

Instead of paying an extra $600 every year in premiums, take that money and deposit it into an interest earning account. The money you save will be an added incentive to continue being a safe and responsible driver.

Locating the right comprehensive policy can take a bit of legwork, but with our online quoting tools a comprehensive car insurance quote is just a click away.