If you're considering when to cancel collision insurance, you'll need to take into account the actual cash value of your car and your monthly budget. It's important to weigh the cost of premiums against the cost of repairs or replacement. In the past, it was recommended to drop comprehensive coverage when a car was between five and six years old or had 100,000 miles. However, this rule is now outdated, as newer cars have greater longevity along with higher repair costs.
Now, the standard rule is that it's worth buying both comprehensive and collision coverage if the combined premium is less than 10% of the car's value, minus the deductible. It's best to take out both collision insurance and comprehensive insurance together because they cover different situations. Collision coverage applies to damage caused by a car accident, while comprehensive insurance applies to damage caused by something other than a collision, such as vandalism or a natural disaster. If you can't pay your car insurance bill, talk to your insurance agent before canceling any type of coverage. Collision insurance helps pay for damage to your vehicle after you hit another car or object, while comprehensive insurance is a type of standalone coverage that protects your car from things like falling objects, theft and vandalism.
When the cost of collision and comprehensive insurance for approximately five years approaches the potential insurance payment, it may not be worth keeping the additional coverage. On the other hand, drivers with a history of accidents or traffic violations and drivers who live in high-traffic areas should consider investing in collision insurance. The collision insurance deductible is the amount of money a driver must pay out of pocket when filing a collision insurance claim. Comprehensive insurance covers damage to the vehicle unrelated to an accident caused by things such as vandalism or a natural disaster. While collision insurance and comprehensive insurance are often taken out together, they are separate types of coverage.
While comprehensive coverage will apply if your vehicle is stolen, no type of car insurance will cover the theft of your personal items from your vehicle. No state law requires drivers to have comprehensive and collision insurance, but your landlord or lender will almost certainly require you to purchase both types of coverage. Losing collision coverage or comprehensive coverage could expose you to problems such as car accidents, car thefts, acts of vandalism, floods and fires. A general rule of thumb is that if the cost of comprehensive and collision insurance exceeds 10% of the value of your car, you can consider eliminating them. When deciding whether or not to drop collision and comprehensive coverage from your auto policy, it's important to consider all factors involved. You'll need to take into account the actual cash value of your car, your monthly budget and any potential risks associated with dropping either type of coverage.
Additionally, if you're unable to pay your car insurance bill, talk to your agent before canceling any type of coverage.