{"id":6182,"date":"2024-10-14T12:41:03","date_gmt":"2024-10-14T12:41:03","guid":{"rendered":"https:\/\/finderica.com\/can-you-drop-collision-and-comprehensive-coverage-to-save-money\/"},"modified":"2024-10-14T12:41:03","modified_gmt":"2024-10-14T12:41:03","slug":"can-you-drop-collision-and-comprehensive-coverage-to-save-money","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6182","title":{"rendered":"Can You Drop Collision and Comprehensive Coverage to Save Money?"},"content":{"rendered":"\n<div>\n<p>Most states require a mandatory minimum of liability insurance if you\u2019re a licensed driver with a car. But if you\u2019re financing or leasing one, the lender may also make you carry collision and comprehensive coverage.<\/p>\n<p>Even if you own a vehicle outright (that is, it\u2019s completely paid off), it still makes sense to carry collision and comprehensive insurance for your own benefit. They\u2019re part of what\u2019s called full-coverage car insurance. They can be really important if your vehicle is involved in a wreck, stolen, vandalized or otherwise damaged.<\/p>\n<p>Unfortunately, collision and comprehensive coverage also make car insurance premiums much more expensive. If the rising cost of car insurance (up <a href=\"https:\/\/www.reuters.com\/markets\/us\/remarkable-surge-auto-insurance-costs-fans-us-inflation-2024-01-11\/\" target=\"_blank\" rel=\"noopener\">more than 20%<\/a> in the last year) has you looking for ways to reduce your premiums, you might have considered dropping collision and comprehensive coverage.<\/p>\n<p>But is that the best move? We\u2019ll explore what collision and comprehensive insurance are, how much they cost and when it might be OK to remove them from your policy.<\/p>\n<h2>What Are Collision and Comprehensive Coverage, and Why Are They Important?<\/h2>\n<p>Collision and comprehensive coverage are part of a full-coverage policy. They cover damage to your vehicle, regardless of fault.<\/p>\n<ul>\n<li aria-level=\"1\"><b>Collision insurance <\/b>covers damage to your vehicle caused by a collision. This could be another vehicle or non-animal objects, such as a fence, pole or tree. It does not matter who is at fault for the collision.<\/li>\n<li aria-level=\"1\"><strong>Comprehensive insurance<\/strong> covers damage to your car caused by any other sources, including storm damage, falling objects, vandalism or theft. It also covers collisions with animals, such as deer.<\/li>\n<\/ul>\n<p>Keep in mind, with both collision and comprehensive coverage, you\u2019ll have to pay a deductible before it kicks in.<\/p>\n<div class=\"thepe-top-of-post\" id=\"thepe-1379990053\">\n<div class=\"adBorder\" id=\"thepe-907787095\">\n<h3>5 Companies That Send People Money When They\u2019re Asked Nicely<\/h3>\n<p>When you log into your bank account, how do your savings look? Probably not as good as you\u2019d like.<\/p>\n<p>It always seems like an uphill battle to build (and keep) a decent amount in savings. But what if your car breaks down, or you have a sudden medical bill?<\/p>\n<p><a href=\"https:\/\/partners.thepennyhoarder.com\/nice-companies-prt\/?aff_id=384\" target=\"_blank\" rel=\"noopener\">Ask one of these companies to help\u2026<\/a><\/p>\n<\/div>\n<\/div>\n<p>Why are these policies important? State minimum liability insurance only applies if you cause an accident. And it only pays for damage to <i>other <\/i>vehicles and injuries to <i>other <\/i>drivers and passengers. It does not cover you and your own vehicle. Comprehensive and collision, on the other hand, can cover damage to your own vehicle, even if you\u2019re at fault.<\/p>\n<p>Other common car insurance coverage types to consider for a full-coverage policy are:<\/p>\n<ul>\n<li aria-level=\"1\"><b>Uninsured or underinsured motorist coverage,<\/b> in case you\u2019re involved in a wreck with a driver without insurance or are the victim of a hit-and-run.<\/li>\n<li aria-level=\"1\"><strong>Personal injury protection (PIP)<\/strong> or medical payments, to cover you and your passengers in the event you\u2019re injured in an accident, regardless of fault.<\/li>\n<\/ul>\n<h2>Should You Drop Them From Your Car Insurance Policy?<\/h2>\n<p>Collision and comprehensive policies are fantastic in the event your vehicle is damaged. However, they also drive up the cost of your monthly car insurance premium. So it\u2019s possible you\u2019re wondering if you can drop them altogether.<\/p>\n<p>The answer? It depends (and usually you shouldn\u2019t).<\/p>\n<h3>When It\u2019s OK to Drop Collision and Comprehensive<\/h3>\n<p>The easy answer: You <i>can <\/i>drop collision and comprehensive at any time, as long as it\u2019s not mandated by a financing or lease agreement. However, even after you\u2019ve paid off your car, it\u2019s usually a good idea to hold off dropping them unless:<\/p>\n<ul>\n<li aria-level=\"1\"><b>Your car has depreciated significantly. <\/b>If your car is so old and run-down that it\u2019s likely only worth $1,000 or so, it probably doesn\u2019t make sense to keep comprehensive and collision coverage. This is especially true if your deductible is almost as high as the value of the vehicle. Just be aware that you could be on the hook financially if you wreck your car or it gets vandalized or stolen.<\/li>\n<li aria-level=\"1\"><strong>You\u2019ve got a sizable emergency fund<\/strong>. If you have money socked away in a high-yield savings account to cover emergency expenses, you can theoretically drop them. It\u2019s a huge risk: It\u2019ll save you roughly $750 a year to drop the coverage, but you\u2019ll spend a lot more if your vehicle is damaged in an event that would ordinarily be covered by comp or collision.<\/li>\n<li aria-level=\"1\"><strong>You don\u2019t drive the vehicle<\/strong>. If you won\u2019t be driving your car for a period of time \u2014 like if you\u2019re traveling out of the country for several months or have a company vehicle you\u2019ll exclusively be using \u2014 but you want to hold on to your car for the time being, you can consider dropping collision insurance. You should still keep comprehensive, in case it\u2019s damaged in a flood, fire or storm, or gets stolen.<\/li>\n<\/ul>\n<h2>How Much Does Collision and Comprehensive Coverage Cost?<\/h2>\n<p>How much insurance costs depends on several factors, including your age and gender, the car you drive, your driving record and where you live. In some states, credit scores can also impact your insurance rates.<\/p>\n<p>That said, the National Association of Insurance Commissioners (NAIC) released a study earlier this year with average car insurance rates from 2017 to 2021. Using this data and adjusting for ABC News\u2019 unprecedented <a href=\"https:\/\/abcnews.go.com\/Business\/car-insurance-rates-soared-36-2020-heres\/story?id=106714266\" target=\"_blank\" rel=\"noopener\">36%<\/a> inflationary increase in car insurance rates since 2020, we\u2019ve calculated the average costs of both collision and comprehensive insurance:<\/p>\n<table style=\"height: 102px;\" width=\"696\">\n<tbody>\n<tr>\n<td><b>Type of coverage<\/b><\/td>\n<td><b>Monthly premium<\/b><\/td>\n<td><b>Annual premium<\/b><\/td>\n<\/tr>\n<tr>\n<td>Collision<\/td>\n<td>$42.00<\/td>\n<td>$503.99<\/td>\n<\/tr>\n<tr>\n<td>Comprehensive<\/td>\n<td>$20.38<\/td>\n<td>$244.58<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Thus, the monthly cost to include both collision and comprehensive insurance on a policy is <b>$62.38<\/b>, The annual cost of collision and comprehensive insurance is <b>$748.57<\/b>.<\/p>\n<h2>4 Steps to Lower the Cost<\/h2>\n<p>It\u2019s no secret collision and comprehensive coverage are a significant cost for drivers of all ages. If you\u2019re hesitant to drop these coverages but need to lower your premiums, try these steps:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li aria-level=\"1\"><b>Reduce your coverage limits<\/b>: Your comprehensive and collision policies have coverage limits. These are max payouts you\u2019ll get from the insurance company, regardless of what your final bill is. By lowering the coverage limits, your rates will go down. Just keep in mind that could mean that the check your insurance provider cuts you to cover damage to your vehicle may not be enough.<\/li>\n<li aria-level=\"1\"><strong>Raise your deductibles<\/strong>: On the flip side, you can increase your deductible for both coverages. That means the amount you have to pay out of pocket before coverage kicks in will be greater. Make sure you have enough money in savings to cover the higher deductible; as long as you do, you can enjoy significant savings on car insurance.<\/li>\n<li aria-level=\"1\"><strong>Investigate car insurance discounts<\/strong>: You may be eligible for several car insurance discounts that can lower your overall rate, without having to adjust or drop coverages. Some common discounts include home and auto bundle discounts, pay-in-full discounts, safe driving discounts and paperless billing discounts.<\/li>\n<li aria-level=\"1\"><strong>Shop around for a new car insurance company<\/strong>: At least once every other year, we recommend comparing rates for comparable coverage at some of the other best car insurance companies. You can also use sites like <a href=\"https:\/\/t.thepennyhoarder.com\/aff_ad?campaign_id=319&amp;aff_id=2\" rel=\"sponsored noopener\" target=\"_blank\">Insurify<\/a>, <a href=\"https:\/\/t.thepennyhoarder.com\/aff_c?offer_id=6819&amp;aff_id=2\" rel=\"sponsored noopener\" target=\"_blank\">QuoteWizard<\/a> and <a href=\"https:\/\/t.thepennyhoarder.com\/aff_c?offer_id=6554&amp;aff_id=2\" rel=\"sponsored noopener\" target=\"_blank\">EverQuote<\/a> to shop around. Chances are good you\u2019ll find more affordable car insurance \u2014 at the same coverage level.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><i>Timothy Moore is a personal finance writer and Certified Financial Education Instructor. He covers banks, loans, insurance and taxes for The SS. Find his work on sites such as USA Today, Business Insider and Forbes.<\/i><\/p>\n<div class=\"thepe-bottom-of-post\" id=\"thepe-1459611529\">\n<div class=\"adBorder\" id=\"thepe-1980203585\">\n<h3>The 8 Best Ways to Earn a Passive Income in 2024<\/h3>\n<p>You\u2019ve probably heard the term passive income. It sounds appealing right?<\/p>\n<p>According to the definition of passive, it would mean you\u2019re earning income without participating or having to do anything at all. Free money? Sign me up!<\/p>\n<p>If you\u2019re interested in establishing a flow of passive income, here\u2019s a guide to understanding the term and getting started.<\/p>\n<p><a href=\"https:\/\/partners.thepennyhoarder.com\/passive-income-desktop-prt\/?aff_id=384\" target=\"_blank\" rel=\"noopener\">Check it out here!<\/a><\/p>\n<\/div>\n<\/div>\n<p>        <!-- ACF Financial Disclaimer --><\/p>\n<p>        <!-- End ACF Financial Disclaimer --><\/p>\n<p>        <!-- \n\n<div class=\"single-social-share-bottom text-center\"> --><br \/>\n                    <!-- <\/div>\n\n --><\/p>\n<p>        <!-- Newsletter Signup Form --><\/p>\n<div class=\"newsletter-signup-wrapper-for-digioh\">\n<div class=\"col-xs-12 newsletter-wrap flex-row\">\n<div class=\"container flex-container\">\n<div class=\"col-xs-12 new-newsletter-form\">\n<p class=\"text-subheading\">Ready to stop worrying about money?<\/p>\n<p class=\"text-get-daily\">Get the SS Daily<\/p>\n<p class=\"email-privacy-policy-blurb-white\">\n<\/p><\/div>\n<\/div><\/div>\n<\/p><\/div>\n<p>        <!-- End Newsletter Signup Form --><\/p><\/div>\n<p><script type=\"text\/javascript\" id=\"wp-fcapi-js-before\">\n\/* <![CDATA[ *\/\n!function(f,b,e,v,n,t,s)\n{if(f.fbq)return;n=f.fbq=function(){n.callMethod?\nn.callMethod.apply(n,arguments):n.queue.push(arguments)};\nif(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\nn.queue=[];t=b.createElement(e);t.async=!0;\nt.src=v;s=b.getElementsByTagName(e)[0];\ns.parentNode.insertBefore(t,s)}(window, document,'script',\n'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\nfbq('init', '263664193816679');\n\/* ]]> *\/\n<\/script><br \/>\n<br \/><a href=\"https:\/\/www.thepennyhoarder.com\/insurance\/collision-and-comprehensive-coverage\/\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most states require a mandatory minimum of liability insurance if you\u2019re a licensed driver with a car. But if you\u2019re financing or leasing one, the lender may also make you carry collision and comprehensive coverage. Even if you own a vehicle outright (that is, it\u2019s completely paid off), it still makes sense to carry collision<\/p>\n","protected":false},"author":1,"featured_media":6183,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[217],"tags":[892,893,894,891,104,103],"class_list":{"0":"post-6182","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-insurance","8":"tag-collision","9":"tag-comprehensive","10":"tag-coverage","11":"tag-drop","12":"tag-money","13":"tag-save"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/6182","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6182"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/6182\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/6183"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6182"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6182"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6182"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}