Collision and comprehensive coverages pay to repair or replace your car (up to a certain amount—the “limit”). The insurer will not pay you more than your car is worth regardless of the amount of damage. (Settlement amount typically falls within the high and low “Blue Book” (www.kbb.com) value of the vehicle.)
So if your car isn’t worth much, it might not make sense to keep paying premiums for collision and comprehensive when you could instead be saving that money toward a new car. Having said that, the cost to insure for damage to or theft of your car is not expensive compared to liability insurance.
There’s no hard and fast formula for figuring out when to abandon collision and/or comprehensive coverage, but some experts recommend dropping it at the point when you’d be more likely to purchase a new car than repair the old one.
Remember, even with collision and comprehensive coverage, you’ll have to pay some of the repair or replacement cost out of your own pocket (your deductible). And the money you get from insurance is rarely enough to purchase a comparable vehicle. Some drivers opt for different deductibles for each coverage type, which can help you save money even if you don’t want to eliminate the coverage entirely.
You can ask your insurance agent for guidance, but you might get more objective advice by doing an online search for “when to drop collision and comprehensive.”
