Does full coverage cover bumper damage?

Collision insurance costs $382 per year on average. Adding collision insurance will make your policy cost more than if you only had your state’s required liability coverage, but collision insurance is still a good investment for many drivers.

Collision insurance, which is optional in every state, protects your car in the event of a collision with an object or another vehicle. The cost of collision insurance varies widely, however, based on vehicle value, deductible, driving history and ZIP code, among other factors.… read full answer

Collision coverage is often bundled with comprehensive insurance, which covers expenses that are not from a collision, like theft or fire damage. Together, these two kinds of coverage are often called full coverage, although this term is not strictly defined.

It’s important to note that the maximum amount you’ll receive from your insurer for a collision claim is the value of your car when you crash it, not when you bought it. As a result, considering your car’s value and your financial resources will help you decide when to drop collision insurance.

To see how much collision insurance costs for your specific circumstances, check out WalletHub’s car insurance comparison tool. And be sure to always compare rates from multiple companies to get the best coverage for the lowest price.

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.… read full answer

When to Drop Collision Insurance

When you rarely use your car

The more you drive, the higher your risk of being in an accident – so if you don’t drive often, your risk is lower than average. That means you could be paying for collision insurance that you’re unlikely to need.

When repairing a car would not have a big impact on your finances

Maybe you have an emergency fund that you could use to fix your vehicle. If you're willing to spend your savings on car repairs, then it's safe to drop collision insurance. However, people often prefer their emergency fund to be a safety net for when they leave their job, face health issues, or need home repairs. It all depends on what you're comfortable with personally and how much you have saved.

When you’re paying 10% of your car’s value in premiums annually

The cost of repairs goes down as your car gets older, so you don’t want to overpay as your car loses value.

Other Things to Consider Before Dropping Collision Insurance

The 10% rule for dropping collision insurance is not set in stone. But it’s a good milestone to keep in mind because as the value of a vehicle falls over time, the value of its insurance coverage does too. And when you start paying a significant portion of your car’s value in premiums each year, you’re simply overpaying to offset the actual level of risk that remains – at least as far as collision damage to your own vehicle is concerned.

Collision insurance repairs or replaces your insured car if it's damaged, whether by another vehicle or an object like a tree or mailbox. This insurance covers up to the cash value of your car - which is where the 10% rule comes in. This rule most frequently applies to older cars or vehicles with a lot of mileage, as they are worth relatively low amounts. There are a few other situations where it might be a smart move to drop collision insurance, too.

When Not to Drop Collision Insurance

Every state requires car insurance except for New Hampshire and Virginia. However, the law doesn't mandate collision insurance. The only legally-mandated car insurance is liability coverage, for damages to someone or something that you accidentally hit with your car. Although collision insurance is optional, it's well worth purchasing for many people.

If you're financing your car, collision insurance is usually required. Otherwise, you might be stuck with a repair bill equivalent to the value of your new vehicle! If you're leasing your car, the same logic applies – most lessors require drivers to carry collision insurance, too.

In summary, it's a smart money move to drop collision insurance when your car is old or has high mileage, but you should definitely think twice about doing so.

Comprehensive and collision insurance are two separate types of coverage that are commonly included in a full coverage policy. Comprehensive insurance and collision insurance are often purchased together and help to ensure that you are protected regardless of how your vehicle is damaged. Collision insurance provides coverage for vehicle damage resulting from an accident, while comprehensive covers damage from unavoidable events, like natural disasters or vandalism. … read full answer

Key Things to Know About Comprehensive and Collision Insurance

• Comprehensive insurance can be bought separately, but collision insurance must be purchased with comprehensive.
• Comprehensive and collision insurance are sometimes listed together on an insurance policy.
• Leased or financed vehicles may require both comprehensive and collision coverage.
• If the premiums cost more than 10% of the value of your car, it may not be worth the price to keep both types of coverage.

Having both comprehensive and collision insurance is usually the best choice, especially if you can’t afford to repair or replace your vehicle out of pocket if it gets damaged. To learn more, check out WalletHub’s guide to comprehensive and collision insurance.