If you are trying to save a little money on your car insurance, you may consider dropping the optional collision and comprehensive coverages from your car. Before you rush ahead however, take some time to review the pros and cons, and the savings and costs involved with such a decision. It’s important to know the repercussions both short and long term before dropping insurance coverage.

First, let’s explain the two coverages in more detail so you understand what you are giving up.


Collision coverage is used for repair or replacement of your vehicle whether or not you are at fault for the accident. Collision also protects your vehicle if the other driver is uninsured. If you are in an accident, your deductible will be taken out of the payments made.


Comprehensive car insurance picks up the slack where collision leaves off. Comprehensive insurance covers other types of damage that are not covered under collision insurance. Examples would include hail damage, theft or vandalism.

Determining When To Drop Collision and Comprehensive Coverage

Know Your Vehicle’s Value in the Market

The first thing you should know when trying to decide whether or not to reduce your coverage is the value of your car in the market. Sites such as Edmunds.com and Kelly Blue Book will tell you what you might realistically get for your car if you tried to sell it.

Know Your Policy

Next, determine what your premiums are for collision and comprehensive. Check your policy and determine what you are paying, and what you will get if you need to use the coverage. Also, do some comparison and play with your deductibles. If you set up a higher deductible, say $500, will the premium be significantly reduced?

Do the Math

A good rule of thumb is the 10% rule. If your premium, even with a higher deductible, is more than 10% of the value of your vehicle, you may want to consider dropping collision and comprehensive coverage. For instance, if your car is worth $5,000 on the market and your collision and comprehensive premiums are over $500 you may want to save the premium money to put towards the purchase of a new car.

If you have the replacement cost of your vehicle in the bank, then surely it is smarter to keep your premium money and drop the coverage.

There is one caveat however, if you have a loan out against your vehicle, your lender will most likely require you to maintain collision and comprehensive coverage in order to protect their own investment in the vehicle.