Owning a car puts you in a position where you have no choice but to carry insurance. The good side is this is your safety net when unagreeable circumstances happen while you are on the road. Buying different types of insurance means you probably have combinations of different things. This depends on which state you are residing in or what your insurance company advises you to carry. For auto insurance, you might be wondering— when should I stop carrying comprehensive and collision coverage on my car?
It usually combines comprehensive and collision coverage, including liability auto insurance, personal injury protection, or PIP. Then there is also uninsured motorists’ insurance. States do not require collision and comprehensive coverages. But, you will find that it is of great value to these types of insurances, and if you have a vehicle that is a loaner or a lease, these things are most likely a requirement for the protection of the lending company.
The Difference Between Comprehensive and Collision Coverage
Both insurances are optional and would cover the damages to your vehicle. Here are some points on why they are different.
Comprehensive Insurance
When it’s comprehensive, it means complete and should include nearly every aspect of anything.
Acts of Nature
The insurance coverage pays for almost all damages to your vehicle by most things. This includes those that come from nature. For example, lightning struck a branch. By some odd luck, the branch breaks and falls onto your vehicle damaging it. Being the vehicle’s owner, you have no control over what happened. This is part of your insurance policy.
This, when included in your policy, would cover the following too:
- Natural disasters like hail storms, earthquakes, and storms
- Fire
- Vandalism
- Accidents involving animals
- Acts of Terrorism and chaos
Theft
In cases of your vehicle being stolen, replacing it is covered by comprehensive insurance. In cases where your vehicle is found after it was stolen, the damages will also be covered.
Comprehensive Insurance and Deductibles
This part of the insurance policy typically carries a deductible. This is the amount that you would shoulder or your out-of-pocket expenses. You and your insurance agent discuss deductibles. These are determined by how much you can shed out for this financially. If an accident happens and the total damages reach $1000, and you have a deductible of $300, then the $700 would be from the insurance company.
A good thing that tops the list of benefits you get from comprehensive coverage is peace of mind. You are covered and will be reimbursed for damages ranging from minor to severe.
Collision Insurance
From the word itself, colliding or crashing into something like a tree or property or with another vehicle. Much like comprehensive, collision insurance has a deductible that decreases as your premium increases and changes after every evaluation.
Collision insurance is beneficial as it also gives you peace of mind and eases the burden of expensive costs for repair. If an accident happens, having collision coverage means you do not have to wait for the other party’s insurance.
Dropping the Insurance
In cases where a vehicle is leased or is a loaner, you cannot drop collision and comprehensive coverage. While this may be the case for rental vehicles, there is no detailed guide for when you drop your coverage. Generally, though, as your car decreases in value each year and you compare it to the increasing cost or replacement for parts and repairs that would soon approach the limit of your premium and your deductible, you may decide on dropping this.
So when it comes to answering this question, always look into the value of your vehicle through the insurer’s eyes and not how you seem to think what its value would be. Insurance providers typically reimburse the vehicle’s value and not for the price tag you might be selling it for. Knowing this fact should tell you that it is almost always less than expected.
Deciding on Dropping Your Coverage
To make the decision process more manageable, car owners usually follow the rule that if their car is around six years old or has reached a good amount of mileage of about 100.000, it is okay to drop the insurance.
That used to be the case, but nowadays, more and more owners and insurance providers suggest that it should depend on the vehicle’s value and the cost of its replacement parts.
What if I still want to keep my car?
This is very understandable because our cars are an extension of our homes. Giving up a car is not easy for most car owners. Older vehicles that can still be driven but have depreciated so much are computed differently. The reason for this is that what you may be getting as your payout may ultimately be so low – this is the value of your car minus the deductible amount on your car, which makes sense that insurance may be too costly over time.
Is it okay to drop just one type of insurance?
Knowing the cost of collision and comprehensive insurance coverages and how much the payout will be, it makes sense to drop one, and yes, you can decide on this. Insurance companies would offer both of these to you, and most of the time, car owners with vehicles over five or six years old drop them altogether. Many car owners also prefer to keep comprehensive instead of collision.
When considering your insurance, it is always good to reflect on your current financial status since both insurances are optional, and deductibles depend on how much you are willing to spend. Having both insurances gives the car owner peace of mind and financial stability. Always discuss your questions with your insurance provider, and trust yourself to be a good driver.
In the long run, should you be the kind of driver who keeps their car for a long time, you can weigh the cost of collision and comprehensive against your maximum insurance payout. A payout would be the value of your vehicle minus the deductible. When the time comes that your insurance bill nears the potential insurance payout, it may not be worth it to keep additional coverage.
We can help you with that!
Got a question about your car insurance? We’re here to help you understand your coverage. Call us today at Advantage Insurance Solutions in Denver, CO, and a car insurance expert will assist you.