When should I drop Collision coverage?

Q: When should I drop Collision coverage on my vehicle?

A: This is a question that we receive very often.  Here are our suggestions:

Each person's situation is different so use your own judgement but usually we tell our clients to look at 3 things in determining if they should drop full coverage: if the value of the vehicle is under $3,000, if it has over 100,000 miles or its 10 years or older. 

To determine the value of your vehicle we recommend looking at Kelley Blue Book.  The value you find on KBB will not be exactly what the insurance company would give you if your car is totaled out but it will give you a good ball park idea of what its worth.

Lastly you can look at what your deductibles are and the premium you are paying for that coverage.  Let's use the following two vehicles as examples:

2004 Chevy Malibu LS - 110,000 miles - Good condition
Kelley Blue Book  Value = $3,450
Collision Deductible = $500
Collision Premium = $240
$3,450 - $500 - $240 = $2,710 (amount that the insurance company may pay)

1999 Ford Taurus G - 60,000 miles - Good condition
Kelley Blue Book Value = $1,100
Collision Deductible = $500
Collision Premium = $215
$1,100- $500 - $215 = $385 (amount that the insurance company may pay)

When looking at these two vehicles, it's probably worth paying the $240 of insurance premium to keep the collision coverage on the 2004 Chevy, but not worth the extra cost for the 1999 Ford.  Consult with your agent on your specific situation. 

-----------------------------------------------------------------------------------------