Should I End Collision Coverage on my Car?


Dear Driving for Dollars,

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My car is a 2009, and I owe about $10,000. Is it possible to lower my collision coverage and if so, should I?

-Anna Carol

Dear Anna Carol,

There's no requirement for collision coverage with your car insurance, but unlike other coverage on your auto insurance policy, it is not something an auto insurer will typically allow you to set a limit on. You either have the coverage or you don't.

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Collision coverage covers you in the event of an accident, whether you collide with another car or an object such as a highway divider or a utility pole. It is often packaged with comprehensive coverage, which provides coverage if your car is damaged in a natural disaster or is stolen.

When your car is older and the cost to repair it or replace it (if it is totaled) is more than what it's worth, it's probably a good idea to drop comprehensive and collision coverage from your car insurance policy, since you'll be paying for this coverage and not getting much in return.

In your case, your car is fairly new, so it's probably worth a substantial amount. Plus, you still owe quite a bit on your car, so you'll still be on the hook with the lender if it is totaled. Keeping your comprehensive and collision coverage will mean your car insurance company will help you absorb some, and possibly all, of that cost.

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