WalletHub, Financial Company
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.
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