When should I remove collision coverage from my vehicle?
Here is a question that my clients ask me often. When does it make financial sense for me to remove my collision coverage from my vehicle? There are a few ways to help you make this determination.
When collision coverage premium is greater than 10% of the book value of your car. For example, the book value of your 2007 Kia is $4,000 ,your deductible for collision is $500 and the premium for collision coverage for a year is $450 you would want to consider removing the collision coverage from that vehicle.
If your vehicle is more than 10 years old it may no longer have enough value to justify you paying for that coverage.
If you have in your savings 10 times the amount of your collision premium you may have enough of a cushion to be able to put a down payment on a new vehicle. So back to the 2007 Kia if you have in your savings $4,500 it may be reasonable for you to drop the collision coverage.
You will never want to remove collision if you have a loan on it no matter what year it is, if you only have one car and it is your sole means of transportation or something you probably have not thought of, what if you get hit by another driver and they are not insured? The only way your insurance company would pay to fix your car is using your collision coverage so if that is something that worries you then you may want to maintain collision for peace of mind.
This Blog was written by the Corinth office of the Cote Insurance Agency.
** The Cote Insurance Blog and articles are general topic overviews and are not intended to be applicable to all scenarios and/or claims. Please consult with your agent