Can I drop collision coverage on an older used car?
When dropping it makes sense
Collision coverage pays for damage to your own car after an accident, so it matters less when the car is worth very little. If a repair would cost more than the car's current value, the coverage may not pay much. Compare the yearly premium with what you would realistically get back after a claim.
- The car's value is low compared with the premium
- You have savings to cover a repair or replacement
- No loan or lease requires the coverage
When you probably cannot
If you still owe a lender, the loan agreement usually requires full coverage that includes collision. Dropping it can put you in default even if the car feels worth very little. Read the loan paperwork before you change your policy.
Changing a policy safely
Ask your insurer how dropping collision would change the premium and what happens to your deductible if you keep it. Make the change in writing so the effective date is clear. Keep liability coverage in place in any case, since it is required in most places.
Re-check the premium at each renewal, since rates and your own needs change over time.
Common mistakes
- Dropping coverage while the loan still requires it.
- Keeping collision on a car worth very little without comparing the premium.
- Assuming liability insurance pays for damage to your own car.
