When is it Ideal to Drop Collision Auto Insurance?

Collision Auto Insurance is one of the common car types of insurance people go for. It pays for fixing your car if your car gets involved in a crash or collision with some object or some other car. While buying this insurance, you set a deductible amount on the repairs of the car. And you reap the insurance benefit only after the damages exceed the predetermined amount.

The total amount payable by the insurance company is determined on the basis of two factors– the deductible sum and the total value of the car. The ceiling for this amount is the book value of your car, minus the deductible.

Collision coverage is an essential part of the insurance package when your car is new. However, as your car gets older, the question of whether or not to continue with the insurance becomes relevant.

How to judge that your collision coverage needs to be dropped?

• Estimate the overall value of your car by glancing through the internet. You may also check out the classified ads in your local newspaper for the information. If the value of your car on the open market has dropped below $3,500, it is probably not worthwhile to continue with the collision coverage on your car.

• If your annual premium is above 10% of your car’s total value then dropping your Collision Car Insurance would be wise.

• The overall value of the car usually goes down as your car gets older. Value of an old car is likely to get decreased to such an extent that the insurance company will refuse to payout, even if it is involved in a collision. So, it is advisable that you drop your collision insurance if your car is aged 5 years or older.

• Considering your driving record is also important if you are deciding on parting with the collision insurance. If you have had your car for a few years and have not been involved in a crash, then it is likely you will continue to be safe. And hence you do not require insurance.However if you at all chose to do away with the insurance under these terms, it is better that you start saving money. This is because even if you are unlucky enough to be involved in a crash after you have canceled the coverage, you will be able to meet the repairs costs without curtailing on other essentials. Particularly, if you have enrolled in a debts consolidation program, save up enough money to cover additional damage expenses after paying your monthly interest amount.

• Last but not the not the least, is the question of whether you can afford the repair costs yourself or not. It is the most crucial factor when you decide on dropping your Collision Auto Insurance.If you are living a fairly comfortable life, or could easily manage without the car for a few days if it gets crashed, then you may cancel the policy without any fear. But, if the case is otherwise, it is advisable to continue with the insurance.

If you think your situation fits any of the above categories, then its advisable that you stop wasting the premiums on your collision auto insurance and reap the benefit from the savings in the long term.

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