If you are wondering when not to carry collision and comprehensive auto insurance the answer is based on two factors. If you have a lien on the car you will not be able to drop either your collision or comprehensive insurance. If you are unwilling to take the risk that comes when you drop those parts of your policy, you should maintain the protection.
When you own your car free and clear you can make a decision regarding carrying collision and/or comprehensive auto insurance. These parts of your insurance policy pay to replace or repair your car. They do not impact what you might owe to another party in an accident.
Collision insurance primarily pays damages to your car that happen when you are driving the car. This is the part of the policy that pays you if you hit another car, or your car hits a fixed object such as a tree.
Comprehensive insurance primarily pays you for damages that happen when the car is not being driven. This part of your policy pays for fire damage and vandalism and theft.
Collision insurance can pay to repair or replace your car when you have an accident and you are at fault, the other driver is uninsured or there is no other driver involved. Not having collision insurance only impacts your potential payments, not the other drivers. Liability insurance pays others when there is a collision. If the other driver is at fault, his or her liability insurance should pay for the damages to your car and your bodily injuries.
When Should I Stop Paying Collision Insurance?
As your car gets older and loses its value, you may want to consider dropping the collision insurance. If your car is totaled, you will only get the book value of that car from the insurance company. When the book value is low enough, you may decide that you would rather lower your auto insurance premiums and take the risk yourself. However, if your car has a lien on it, you probably need to remove it by paying off the loan first.
When Should I Stop Paying Comprehensive Insurance?
Since comprehensive insurance costs much less than collision insurance, you may want to keep even as your car loses its value, but the same basic rules and logic apply to the question ” when do i drop collision insurance?” and ” when do i drop comprehensive insurance?”.
When Should You Drop Collision Insurance?
You should look at the cost of the collision insurance and the comprehensive insurance on each car and compare it to the book value of the car. When you do this, you can determine if you would rather pay the extra money and have the security of knowing that you have coverage for the perils covered by these aspects of your policy or would rather save the money and take the risk yourself.
