Interested in Saving Money by Dropping Collision Coverage? Here’s What You Should Know.


Collision insurance coverage covers the damage to your vehicle if you are at fault in an accident, and it is often the most expensive coverage on an automobile insurance policy. If you are wondering whether you can afford to drop collision car insurance to save money on your insurance policy, consider a few things before making your decision.

1. Do you have a loan on your vehicle?

The first thing to take note of before dropping the collision coverage on your automobile insurance is whether you are still making payments on your vehicle. If your car still has a loan on it or you have used it as collateral for a personal loan from the bank your lending institution will likely require that you keep collision coverage on your vehicle until the loan has been paid in full or it is under a certain dollar amount. Contact your bank and ask them what their requirements are; they might let you raise your deductible to save money on your insurance bill even if you can’t drop collision coverage all together.

2. Is the cost worth it?

Weigh the cost of your insurance policy’s collision coverage against the value of your automobile. Most insurance companies list the cost for individual options on your policy, making it easy to see how much you pay for collision. If you pay $500 each year for collision coverage with a $500 deductible on a car that has a value of only $1,000, you will save yourself money if you go at least one year without an accident that totals your vehicle.

3. Will you lose roadside assistance?

Some insurance companies only offer roadside assistance for vehicles that carry collision and comprehensive coverage. If you currently have roadside assistance on your policy, ask your agent if you can keep it if you drop your collision insurance. If your company won’t let you keep it, factor the price of another roadside assistance service into your decision of whether to get rid of collision coverage.

4. Do you have another vehicle?

Rental car coverage on your insurance policy is meant to cover a rental vehicle while your car is being repaired because of a covered insurance claim. Without collision coverage on your policy, rental car coverage will not apply if you are in an accident. If you have a second vehicle that you can drive you may not need to worry about rental car coverage.

5. Can you afford the down payment for another car?

If your vehicle is no longer drivable after an at-fault accident, your collision coverage will pay you the value of your vehicle minus the deductible. If you drop collision insurance and total your vehicle you will need to come up with the down payment for another vehicle on your own if you do not already have another vehicle to drive. If you choose to drop collision, try saving the difference in cost for your policy so you will have the money for a down payment if you need a new vehicle.

Be sure to consider the whole picture before you drop the collision car insurance on your auto policy. If it makes financial sense, go ahead and cut the cord to save money on your car insurance!

Guest author Patricia White is a freelance blogger and is writing on behalf of

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