When to Drop Collision Insurance

What you could get from collision insurance? Basically, a cover from all the expenses your damaged car might require after having, from the name itself, a collision with either an object or another car itself. Whether the collision was your fault or not, the expenses will still be covered by the insurance anyway.

Dropping your collision insurance might be risky but it isn’t as bad idea as other people think it is.  If you are considering of dropping it, you have to say yes to a few questions first.

First in line, is your car worth $3,500 below? You may want to check your car’s actual cash value using sources such as Kelley Blue Book and N.A.D.A. Guides. Note that your car’s actual condition is also one of the measures used to estimate your car’s actual worth. If your answer is yes, getting rid of the insurance would be the most practical thing to do.

Is the premium you pay annually costs above 10% of your car’s actual value? To calculate the annual cost of your collision insurance, multiply the monthly charge by 12 or the semi-annual charge by 2. If your answer is yes again, it is advisable to drop your collision insurance.

Is your car 5 years old or beyond? If it is another yes, there’s no point in insisting to pay your premium. The older the car, the lesser its actual value becomes. Furthermore, the probability that the insurance company will cover your car in case of collision also becomes highly unlikely if your car is too old already.

Are you a responsible driver? Let’s be honest here. If your answer is indeed, you probably have never been involved in a car crash before.  We may never know but if you are confident that your driving is safe 95% of the time, dropping your collision insurance is something you should not fear about.

The most important question you should ask yourself is are you prepared? Can you shoulder the cost of having a car accident? If it is yes yet again, you can drive you car along the freeway without collision insurance by all means.