Should You Drop Collision And Comprehensive Coverage?
Last Updated on December 10, 2019
If you have comprehensive and collision coverage (or just one of the two) and your car insurance premiums are putting you in the poorhouse, you might be wondering if you can ditch those two parts of your insurance plan and still be okay. Most of the time, you should be fine with liability coverage but there are a few instances where dropping those extra coverage options just isn’t possible – or smart. We’ll discuss why you might need comprehensive and collision insurance plans, what they are, and when and how you can get rid of them to reduce your premiums.
What Exactly Is Collision Coverage?
The insurance that everyone is required to carry by law is called liability insurance. It is intended to pay the repair or replacement costs of the other person’s vehicle if you get into an accident that is your fault, as well as part or all of the hospital and other medical bills accrued because of the accident. Any amount over what your liability insurance covers you will be required to pay yourself.
Collision, on the other hand, covers your car in an accident. If someone hits you, their insurance will pay for your repair and medical if they were at fault. But what if you were at fault? Your liability doesn’t cover that and that’s where collision comes in.
Collision insurance is good to have because if you get into an accident with liability and you are at fault, you will be paying your repair costs yourself. You’ll also be paying higher insurance premiums because of the accident, unless your insurer has a plan in place to keep your premiums the same even if you are involved (and at fault) in a collision.
What Exactly Is Comprehensive Coverage?
Comprehensive insurance is different than either liability or collision insurance. Comprehensive has nothing to do with driving or accidents. Instead, comprehensive is there to cover all the stuff that could happen to your car when you aren’t driving it. So, if a windstorm comes along and blows down a tree that destroys your car – you are covered with comprehensive insurance. This is the same for vandalism, car theft and many other things. You will have to check your policy for details.
There are a couple of other insurance options that you should be aware of. Liability, comprehensive and collision are the three main types of insurance but you also might want to opt for uninsured driver insurance, which protects you if you are in a collision with someone who doesn’t have insurance – or doesn’t have enough insurance. If you don’t have uninsured motorist insurance you basically have two options – sue the person and force them to pay for the damage or pay for it out of your own pocket.
When It Makes Sense To Get More Insurance
There are times when it makes sense to stick with your comprehensive and collision insurance – or to get comprehensive or collision if you don’t already have it. For example, if you have a new driver in the house, and you are concerned with letting them drive your expensive car without collision coverage. Also, there are times that it makes sense to get comprehensive insurance such as in an area that is plagued by hurricanes, tornadoes, blizzards, or other extreme weather. In addition, cars that are parked in bad neighborhoods where they are subject to vandalism or theft might benefit from comprehensive. Most of the time, you will be fine with liability insurance, but you will have to make the call based upon your own situation.
What about Leased and Financed Vehicles?
A note about leased and financed vehicles – you may be required to carry comprehensive or collision (or both) on leased or financed vehicles. In fact, it is almost a certainty. Leased vehicles almost always require liability, collision and comprehensive – including much higher limits of liability than is required by law. Financed vehicles also usually require comprehensive and collision while you are paying on them. These vehicles still belong to the bank until you have paid off your note so they want to ensure that they are protected if you are involved in an accident.
Should You Drop Coverage?
So, the decision as to whether or not you should drop collision coverage or get rid of your comprehensive insurance will depend on the likelihood of you needing that particular insurance. Most people get by just fine with liability insurance but if you can afford it, the extra protection is nice to have. You’ll be glad that you have comprehensive or collision if an accident happens or a tree falls on your car. But if none of those things happen, the insurance premiums that come with comprehensive and collision can be tough to justify. The decision is yours to make.