Our last article discussed the
features and benefits of Collision and Comprehensive Coverage for your vehicles. The choice to drop either type of insurance could result in a slight savings or a hefty financial burden.
Collision
Dropping Collision Coverage pretty much equates to your car having very little value and you’re not relying on insurance to replace it in the event of an at-fault accident (avoid a deer, hit a tree) or when the at-fault driver is unknown (hit and run).
Many people feel that if their car’s value ($2,000) is only approximately twice their insurance deductible ($1,000), it’s worth the savings to drop the extra Collision Coverage. Others go by the 10% rule which is if your vehicle is worth $2,000 (100%) and the Collision Coverage is more than $200 (10%) a year, you should drop it.
If you feel that your vehicle has little value and you currently have enough cash in your emergency fund to replace it, then you might consider dropping the extra coverage.
Other factors to consider:
- The more often you drive, the more often you’re at risk for an accident. (The average US driver is involved in an accident every 10 years.)
- The more frequently you’re surrounded by other drivers, say in cities or on highways, the more you’re at risk to be in an accident.
- Do you park in lots, public garages or in urban areas?
- If you drive your vehicle at high-risk times (drunk drivers on the roads) or in dangerous weather conditions, the more you’re at risk.
Comprehensive
The cost of an average Comprehensive Coverage option is quite low; so many people despite the age of their vehicle choose to keep it regardless. As a reminder, Comprehensive Coverage protects you from losses due to fire, theft, damage due to fallen trees, vandalism, etc.
So before you decide to drop the Comprehensive Coverage, determine your vehicle’s worth and consider how often your vehicle may be at risk.
- Do you park in a garage?
- Do you park in a safe neighbourhood?
- Is car theft common in your area?
- Do you have crazy exes who are likely to slash your tires and smash your windshield?
The decision to drop either Collision of Comprehensive Coverage is completely up to the insured. Please consider the above factors carefully and contact us if you have any questions. 519-736-8228