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Do I need comprehensive and collision insurance?

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Comprehensive and collision coverage are optional types of car insurance that pay to repair or replace your car in certain situations.  

Collision coverage pays for:

  • Damage to your car when hit by another vehicle
  • Damage to your car when you hit an object, for instance a pole or fence

Comprehensive insurance pays for:

  • Damage to your car from vandalism, hail, flooding, fire, falling objects, rocks cracking windshields
  • Damage to your car from hitting an animal, for instance a deer
  • The value of your car if stolen and not found

Comprehensive and collision coverage typically won’t bust your budget, as the average cost is fairly affordable. According to the Insurance Information Institute (III) the average annual rate for collision is $488, for comprehensive it’s $172.  III data show that about 77 percent of drivers buy comprehensive coverage, and 72 percent buy collision. But should you?  That depends on your particular situation. Penny Gusner, consumer and data analyst for CarInsurance.com, says you should buy comprehensive and collision coverage under the following circumstances:

  • If your car is less than 10 years old.
  • If your car is more than 10 years old and worth $3,000 or more.
  • If you can’t afford to repair or replace your car if it’s severely damaged or stolen.

When to drop comprehensive and collision

If you file a comprehensive or collision claim, your insurer will only pay out up to the fair-market value of your car, minus your deductible. That means smart car insurance shoppers should assess their financial situation, their car’s condition, age and value when deciding whether to drop comprehensive and collision.

"If you wouldn't repair it for a major mechanical issue, you probably shouldn't insure it for comprehensive and collision," says Gusner.

She says you should think about dropping comprehensive and collision under these circumstances:

  • When premiums for these two coverages reach 10 percent or more of the potential payoff should you file a claim. The potential payoff is your car’s actual cash value minus your deductible. For instance, if your car is worth $4,000 and your deductible is $500, your potential payoff is $3,500. If your annual comp and collision premiums surpass $350, it’s time to drop them.
  • If your yearly comprehensive and collision premiums plus your deductible add up to more than the value of your car. For example, the III pegs the average annual rate for both coverages at $660, and with a $500 deductible, that totals $1,160. If you’re driving a very old car that’s in fair condition, with lots of mileage, the value could be below $660. (Sites such as Kelley Blue Book and the NADA have tools you can use to find the value of your used car.)
  • You wouldn’t pay to fix your car if it had mechanical issues.

Her general guidelines for coverage as cars grow older:

A car repair that costs what your premiums and deductible total is a good barometer, Gusner says. If you would simply buy a newer car, don't insure the old one for comprehensive and collision.

Can you drop collision only?

Because comprehensive coverage is a comparatively small percentage of the overall premium tab and covers a lot of events, it may be worth keeping.

Insurance companies prefer that collision and comprehensive coverage be purchased together, but some will allow customers to buy one without the other, Gusner says. It's typically more difficult to obtain comprehensive without collision coverage than just collision on its own, she says.


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9 Responses to "Do I need comprehensive and collision insurance?"
  1. Firebird

    My 2005 Honda Civic is worth $5,300 if I were to sell it privately, $4,200 if I were to trade it in. I have no real option financially to buy a new or used car on my own should something happen to this one.

      Reply»  
  2. Sue

    I think it's possible to purchase comp without buying collision but don't believe you can buy collision without comp.

      Reply»  
  3. Audrey

    I'm 58, never had a ticket since I received my license in 1975, nor have I had an accident. Yet, I seem to pay a lot for car insurance. I have relatives and know of others that have had DUIs, many ticket, etc. and they seem to pay much less. I just don't understand how or why and my rates with my current insurer doesn't decrease. I will consider another company that awards safe drivers.

      Reply»  
  4. Kathy

    Thanks for the helpful information. I figured out it's time to drop comp and collision and just save the money towards a new car.

      Reply»  
  5. Randy Miller

    There is no rule of thumb or formula to use for the general public for dropping physical damage coverage. I have been selling car insurance for 35 years and each person's situation is different. The unfortunate part of this is the lower income people that need to save the money are the ones that should keep physical damage longer. It can create a real hardship if the vehicle to totaled out and they don't have the money to replace it. I have had several claims where my insured was run into and the driver that caused the damage had no insurance and didn't have any money to pay for the damage to my customers car. My insured had dropped their physical damage coverage because they had gone for over 25 years without having an at fault accident and were out $3,000 to $5,000 for their vehicle.

      Reply»  
  6. John Graham

    It says that dropping comp and collision is okay IF you have more than one car or you can afford to buy another car on your own. The little money you save by dropping comp and collision will not buy you another car.

      Reply»  
  7. Monica

    I have a 2000 Nissan Altima and am paying $980 annually without comprehensive coverage. I am not too sure collision is included or not and am not currently at home to review the policy. Additionally, I am getting a discount for multi-bundle insurance because my home insurance is with the same company. I think I am paying too much, do you?

      Reply»  
    1. CharlieAnn September 30, 2013 at 11:27 AM

      You may want to reconsider comp coverage, because older vehicles are more likely to have an oil leak or electrical issue that could cause the vehicle to catch on fire. I use to handle insurance claims and was an agent for a short period of time. Comp is usually not very expensive coverage, and it's probably the only coverage that isn't rated based on your driving record.

        Reply »  
    2. Jamie April 25, 2013 at 6:07 PM

      Monica -- It actually matters, if you have collision coverage or not when asking if $980 annually is to high to pay. Your driving record matters, as well as anyone listed on your policy as a driver, your age, how you use the car (pleasure use, commute and distance you commute),and, depending on what state you live in, your credit score can matter as well. Your coverage limits also matter, do you have $20,000, or $50,000 or $100,000 liability limits? There are a lot of factors to look at.

        Reply »  
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