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You should drop comprehensive insurance when you can afford to repair or replace your car out of pocket in a worst-case scenario. You should not drop comprehensive insurance if the car is valuable, since the coverage is inexpensive and will usually pay up to the car’s actual cash value, minus a deductible. Additionally, you definitely should not drop comprehensive coverage if it’s required by your lender or lessor. Doing so can result in serious consequences like force-placed insurance and even repossession.
Comprehensive insurance is sometimes considered “bad luck” insurance, since it covers things that are mostly out of your control as a driver, like vandalism, theft, natural disasters or hitting a deer. A standard rule of thumb is to drop collision and comprehensive insurance when the combined premiums are more than 10% of your car’s value, minus your deductible.
However, you should only consider this guideline within the context of your personal circumstances. It’s also worth noting that many experts consider comprehensive insurance to be a better investment than collision coverage, since it is not affected by your driving habits and is generally cheaper.
In addition to your car’s value and your own finances, how likely you are to file a claim should factor into whether or not you drop comprehensive car insurance coverage. For example, even if you could comfortably replace your car, it probably isn’t smart to drop comprehensive insurance if you live in an area with frequent hurricanes.
People also ask
What is comprehensive insurance?
Comprehensive insurance is coverage that helps pay for the cost of damage to your vehicle when you're involved in an accident not caused by a collision. Comprehensive car insurance covers losses from things like theft, vandalism or extreme weather events.
Comprehensive coverage is never required by state law, but it is usually needed for cars that are leased or financed.
What Comprehensive Insurance Covers
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...
read full answerDo I need to carry comprehensive insurance on an old car?
You don't need to carry comprehensive insurance on an old car, unless you have a financing contract that requires it. Comprehensive coverage becomes less valuable as your car depreciates, so you could drop it. A good way to find out if comprehensive coverage is worth it is to compare the value of your car with the cost of insurance and your deductible.
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