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You need comprehensive and collision insurance if your vehicle is leased or financed. No state laws require drivers to carry comprehensive and collision insurance, but your lessor or lender will almost certainly require you to purchase both types of coverage. Even if you're not required to get collision and comprehensive insurance, you should still purchase them if you cannot afford to fix or replace your car after it is damaged.
Collision and comprehensive insurance cover vehicle repair and replacement, but in different situations. Collision coverage applies to damage caused by a car accident, while comprehensive insurance applies to damage caused by something other than a collision, such as vandalism or a natural disaster. When purchased together with liability insurance, collision and comprehensive insurance make up full coverage, which protects you financially if your car is unexpectedly damaged.
A general rule of thumb is that if the cost of comprehensive and collision insurance is more than 10% of your car’s value, you can consider dropping them. However, before dropping full coverage insurance, you should consider your financial situation and how likely you are to file a claim. If you aren’t in the financial position to pay out of pocket to repair or replace your car if it is suddenly damaged, then you should continue carrying comprehensive and collision insurance.
People also ask
Do I need collision insurance?
Yes, you need collision insurance if your car is leased or financed. Collision insurance is not required by any state laws, but most lessors and lenders require drivers to have it until the car is paid off. Even if you’re not required to have collision insurance, you should still purchase it if you cannot afford to pay for damage to your vehicle after an accident.
Why You Need Collision Insurance
Collision insurance pays to...
read full answerWhen should you drop collision and comprehensive coverage?
You should drop collision and comprehensive coverage if the premiums exceed 10% of your car’s value and you can afford to repair or replace your vehicle if it’s damaged. You will also need to own your vehicle outright in order to drop collision and comprehensive insurance, since most lenders and lessors require both.
Even if your car isn’t worth very much, it’s typically a good idea to keep collision and comprehensive insurance if you’re...
read full answerWhen should I drop collision insurance?
You should drop your collision insurance when your annual premium equals 10% of your car's value. If your collision insurance costs $100 total per year, for example, drop the coverage when your car is worth $1,000 since, at that point, your insurance payments are too close to your car's value to be worthwhile. Drivers can easily find a car’s value with the online vehicle appraisal calculators from Edmunds or Kelly Blue Book.
When to...
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