WalletHub, Financial Company
You need collision on an old car if you have an auto loan or lease. You should also keep collision insurance on an old car if you cannot afford to pay out of pocket to repair or replace the car after an accident.
A general rule of thumb is that you can think about dropping collision insurance if the premium exceeds 10% of your car’s value, so it’s possible that collision coverage might not be worth it on an old car that isn’t worth much. But you should only consider this rule in the context of your own circumstances. If you depend on your car for everyday use and can’t afford to pay for repairs, collision insurance could keep you out of a difficult situation if your vehicle is damaged in an accident.
To learn more about customizing your coverage, check out WalletHub’s guide to deciding how much car insurance you need.
Scott W. Johnson, Manager and Principal Broker Agent
Thank you for your question.
Old Car... How old?
In general if you can afford to replace just about anything than generally I would not insure it. I would be strict looking at this answer though. Do you actually have the money to replace it in a savings account right now? Will you be able to save the money that you will not be spending on the added insurance cost and put it directly into that savings account?
If the answers to these two questions are both Yes, than I would consider dropping collision coverage.
Also, since you may have the money to replace it the car yourself, I would also take the time to confirm that both your liability and uninsured/underinsured motorist coverage are engough.
People also ask
R. Joseph Ritter Jr., Financial Advisor
Probably not. Collision pays you for loss or damage to the vehicle in a crash. Collision is the primary payer when you are involved in a crash with another person, regardless of fault. You would only feel the effects of not having collision if you hit a deer (as an example), caused a crash with another vehicle or were the only vehicle involved in a crash. If another driver was at fault and you did not have collision, the other driver's insurance would cover your vehicle. Comprehensive is different in that it covers theft, storm damage, vandalism, etc. So if you drop collision and/or comprehensive coverage, you should have the money saved up to buy another vehicle. Assuming you do or you have other means available to replace the vehicle, collision coverage is pretty much a waste as vehicles age, deteriorate and depreciate in value.
Did we answer your question?