When to Drop Collision Auto Insurance?

Collision car insurance plays a crucial role in protecting vehicles against accident-related losses. However, there are circumstances where it may be prudent to consider dropping collision insurance to save money. Let’s discuss the intricacies of collision and comprehensive coverage, their relationship, and explore when it’s appropriate to drop both coverages and opt for liability-only vehicle insurance. We will also discuss instances where dropping collision coverage while maintaining comprehensive coverage can lead to substantial savings. Additionally, we’ll address when it might be necessary to reinstate collision coverage after dropping down to comprehensive-only insurance.

Understanding Collision and Comprehensive Coverage:

Collision coverage is designed to protect vehicles from damages resulting from collisions with other vehicles or objects. On the other hand, comprehensive coverage offers protection against non-collision incidents such as theft, fire, vandalism, and natural disasters.

The Relationship Between Collision and Comprehensive:

Collision and comprehensive coverage are often bundled together as they provide physical damages protection for your automobile against various risks. However, some insurers offer flexibility, allowing policyholders to select specific coverages based on their needs and circumstances.

When to Drop Both Collision and Comprehensive Coverage:

One key factor to consider is the vehicle’s value. If the value has significantly diminished, the cost of maintaining collision and comprehensive coverage may outweigh potential insurance claims. In such cases, opting for liability-only auto insurance can help reduce costs while still providing coverage for damages caused to third parties. Motorists should consider two key points before they make this decision:

  • Their vehicle’s value depreciated substantially
  • They have enough savings to pay for vehicle repairs or replacement if worst case scenarios.

When to Drop Collision and Keep Comprehensive Coverage:

There are situations where dropping collision coverage while maintaining comprehensive coverage can be a viable option. For instance, if a vehicle is primarily stored in a garage and not driven frequently, the risk of collision-related damages is significantly reduced. However, comprehensive coverage is still important to protect against non-collision risks such as theft or damage from natural disasters. Additionally, for collectible automobiles that are mainly kept in storage, comprehensive coverage alone may be sufficient.

Saving Money by Dropping Collision Coverage:

By carefully evaluating deductibles, premiums, and potential claims, vehicle owners can determine the financial impact of dropping collision car insurance. In some cases, the cost savings outweigh the potential risks, making it a viable decision. However, it’s important to assess the balance between risk exposure and potential cost savings before making a final decision.

Usually, this option is considered when a vehicle loses most of its value that makes it not cost-effective to pay premiums for Collision and Comprehensive coverage. The policy is dropped to liability only, which is usually only 1/3 of full coverage vehicle insurance.

Reinstating Collision Coverage after Dropping to Comprehensive Only:

At times, vehicle owners may not need to drive their automobiles for a while and therefore decide to store it. When a vehicle is taken off the roads, collision auto insurance becomes redundant. However, if the automobile still has some value, it makes sense to keep Comprehensive coverage. This serves three key purpose;

  • It provides protection for the parked vehicle against fire, theft and other non-collision related perils.
  • It keeps your policy active that keeps the continuous insurance discounts for when you want to reinstate your policy.
  • It reduces the premiums substantially because collision coverage is more expensive in general. And if you dropped liability coverage as well, the savings can be large, while your policy still protects your vehicle.

When you want to drive your automobile again, you will need to reinstate driving related protections, namely collision and liability. Under no circumstances you should drive a vehicle without liability coverage since it is against the laws and too much risk. But depending on the value of your automobile, your available savings to pay for possible repairs or replacement, you can decide to reinstate collision as well.

By the way, some automobile insurers may agree to allow you to go comp only for a stored vehicle but when you want to reinstate your coverage, they may not allow you to keep comprehensive coverage while you don’t reinstate collision. You need to check this with your car insurance company as practices often differ.

Deciding when to drop collision car insurance coverage requires a careful assessment of the vehicle’s value, storage arrangements, usage patterns, and cost considerations. While liability coverage remains essential, there are instances where comprehensive coverage alone provides adequate protection. By understanding these dynamics, vehicle owners can make informed decisions to optimize their insurance coverage, striking a balance between safeguarding their assets and achieving substantial cost savings.