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When To Drop the Collision Insurance (Full Coverage)

For sake of explaining when you should drop collision let’s say Joe has a 98 Honda worth about $2000.  When should he drop the collision and comprehensive and simply insure with liability coverage only?


I would ask Joe, How long would it take you to save $2,000 for a replacement vehicle (assuming you don’t already have a car replacement fund saved).  Joe answers, “about 6 months”.  In this case Joe, you should consider dropping collision only if you’re okay with not driving that car for 6 months, in the event you total it. 

If Joe has a second back-up vehicle or has no issues with taking the bus, dropping the coverage may be something he may want to consider.  It all really comes down the the amount of risk you want to retain, and the risk you’d rather place on the insurance company in exchange for a monthly premium.

Other Facts to Consider

Collision is usually sold with comprehensive coverage.  Comprehensive pays for any damage to your vehicle (other than collision) which exceeds the amount of your deductible. (deductible being the amount you must pay before your coverage goes into effect)

If you get into an accident and it’s the other person’s fault, their liability coverage (assuming they have coverage which isn’t always the case) would pay you for injury and property damage only up to their policy’s liability limits.  California for example only requires drivers have $5,000 in (PD) property damage.