Car insurance can make up a substantial portion of a family’s budget, so you should always look to reduce this cost. In addition to shopping for budget car insurance quotes, vehicle owners should carefully review their coverages to determine if they’re still needed. Collision coverage alone usually makes up a large percentage of your auto insurance bill. Now, if the owner still has an unpaid loan on the car, the bank will require her to maintain comprehensive car insurance coverage. But once that loan is paid off, should the owner drop collision coverage? Like anything, the answer depends.

First, check how much the vehicle is worth. Any number of online resources, such as Edmunds or NADA, are available for this task.

How much does the collision coverage cost? This info can be easily found in the policy specs. Compare the cost of this coverage to the vehicle’s value. If the premium represents say 1/3 of the vehicle’s value, it probably makes sense to drop the coverage. Keep in mind that after a loss the insurance company is only going to pay up to the vehicle’s value minus the deductible.

Would you be able to replace your current vehicle after a loss? If you have enough savings where you are comfortable self-insuring, then you may decide to waive the coverage and pocket the additional premium savings.

Do you find any value in the extra coverages provided by your collision coverage? For example, some policies might offer car rental reimbursement and free towing to policyholders who carry comprehensive and collision coverage.

At the end of the day, each vehicle owner must decide how much risk they are willing to assume versus the certain cost of the insurance. An insurance agent can help, but ultimately this is a decision that only the vehicle owner can make themselves.

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