Should I Get Collision Insurance on an Old Car
It depends on whether the car is worth more than the coverage would cost you over time.
It usually comes down to the car's value
If your car is worth very little, collision coverage can cost more over a few years than the car would pay out if it were totaled. That math is worth doing before you renew, because insurers set collision payouts based on the car's actual cash value, not what you paid for it or what it would cost to replace.
If you could not afford to replace the car yourself, or you still owe money on it, keeping collision coverage makes sense regardless of age. If the car is paid off and you have enough savings to buy another one outright, dropping collision is a reasonable choice. Ask your insurer what your car's current value is and what you are paying in collision premium each year. Compare the two directly.
What the car is worth right now
Get an actual number, not a guess. Ask your insurer for the car's current actual cash value, or check a pricing guide for its year, mileage and condition. This is the number that matters, not what you paid for it or what you think it's worth.
Once you have that number, add up what you've paid in collision premium over the last couple of years. If that total is close to or more than the car's value, the coverage is costing you more than it could ever return.
A car's value drops each year, so this isn't a one-time decision. A car that was worth keeping collision on two years ago might not be worth it now. It's worth checking again at each renewal, especially once the car passes a certain age or mileage.
If you still have a loan or lease on the car, your lender likely requires collision coverage regardless of the car's value. Check your loan agreement before you consider dropping it.
What you could cover yourself
The real question isn't just what the car is worth. It's what would happen if it were totaled tomorrow and you had no collision coverage. Could you cover a replacement car in cash, or would you be stuck without transportation?
Some drivers keep collision coverage on an older car not because the payout would be large, but because they'd rather have insurance handle a bad week than dip into savings. That's a reasonable reason to keep it even if the math on premiums versus payout looks close.
Others drop collision and set aside the money they would have spent on premiums, so they're covering their own risk instead of paying an insurer to cover it. This only works if you actually keep that money aside rather than spending it.
If you're unsure, ask your insurer to show you both numbers side by side: what you'd pay in collision premium over the next year, and what the car would be worth if totaled. Seeing them together makes the decision clearer than either number alone.
Questions people ask about this
What happens if I drop collision and someone hits my car?
If another driver is found at fault, their liability coverage should pay for your car's damage, not yours. Collision coverage matters most when the accident is your fault, a tree falls on your car, or you hit something and there's no other driver to make a claim against. Without collision, you'd pay out of pocket for any accident that is your fault.
Does dropping collision affect my other coverage?
No, collision is separate from liability and comprehensive coverage. You can drop collision while keeping comprehensive, which covers things like theft, weather damage and hitting an animal. Check with your insurer about which coverages are bundled together on your policy and which can be adjusted independently.
Will my premium go down a lot if I drop collision?
It depends on your car, your driving record and your insurer, since collision is often one of the larger pieces of a premium. Ask your insurer for a quote with and without collision so you can see the actual difference for your policy rather than assuming.
Should I drop collision only in certain seasons?
Some drivers consider this for a car they only use part of the year, but check with your insurer first. Coverage gaps can sometimes affect your rate when you add the coverage back, and some insurers don't allow you to add and drop collision repeatedly within a short period.
What is gap insurance and do I need it instead?
Gap insurance covers the difference between what you owe on a loan and what the car is worth if it's totaled, which is a different problem than collision coverage solves. If you own the car outright, gap insurance doesn't apply to you. If you still owe money on it, ask your lender whether gap coverage is required or recommended.
See what dropping or keeping collision would actually do to your rate before you decide.
Ask your insurer for your car's current actual cash value and a breakdown of what you're paying for collision coverage specifically. Compare that premium against the payout you'd get if the car were totaled. If you still owe money on the car, check your loan agreement for a coverage requirement before changing anything. If you're close to a renewal date, this is the easiest time to make the change without extra paperwork. Get a quote both with and without collision so you can see the real difference for your situation.
