First, the vocabulary: Collision is the insurance that pays to repair your car if you’re in an accident. Comprehensive is the insurance that pays to repair your car if it’s damaged some other way, like by fire or other natural disasters. Unlike liability insurance, neither of these is required. Of course, you’ll want them while your vehicle is relatively new and valuable. But later, even insurance agents advise that you can save by dropping them. Here’s what the website insurance.com says. Quote: “If the premiums and deductible amount for this portion of your car insurance policy cost more or the same as the worth of your vehicle, it’s time to drop the coverage. For example, if your car is worth $1,000 and your coverage costs $500 a year plus a $500 deductible, you’re not really getting anything for your money.”
Other experts suggest that you should consider nixing collision and comprehensive coverage when your annual premium for those equals more than ten percent of your car’s value. If you cancel these options, instead of fixing your vehicle after it’s mangled, you will just kiss it off and get a new —or new to you— one. Canceling collision and comprehensive can reduce your premium by 30 to 40 percent, according to Autoguide.com.
My friend Jacqueline used to drive a fast, loud, older car that she loved. Her boyfriend had a somewhat aged vehicle too. It was hard for Jackie to admit that it wouldn’t be worth repairing her old rocket. But, I admit I bugged her about it and when she finally got around to canceling the collision and comprehensive coverage on her vehicle and her beau’s, she quickly changed her mind. Here’s the math.
Cancelling Collision and Comprehensive
Average annual premium for Jackie’s two-car family: $3,744
Policy without collision and comprehensive $2,434
BIG SAVINGS = $1,310
That’s enough savings that you can start a fund toward your next car!
