When to drop collision insurance

Hi. I have a 2004 Camry with about 92K miles. Please give some direction as to when to drop collision on it. I have a $500 deductible and the cost is $207 per year. Thanks

Drop collision when the value of the car becomes such that any damage no matter how slight will total it, and the money you’ll get from it being totaled isn’t enough to make it worth paying for the insurance.

So, for example, if you’re driving a 1990 Civic that’s bluebooked at $1,000, you’ll probably get about $750 for it from the insurance company unless you threaten to sue, minus your deductible, which means $250. It’s silly to pay $207/year for a $250 payout. It makes more sense to put that $207/year into a savings account that can be used as a down payment on another car if yours gets wrecked. By year 2, you’re far ahead of what you would get from the insurance company.

The reason I used a Civic is because this happened to me years ago with an old CRX I had. An old lady swerved into my lane and while avoiding her I hit some ice and spun into a snowbank, which ripped my back bumper off. I spent $200 on a new bumper and about 15 minutes installing it. The insurance company would have totaled it because a body shop would have charged probably $800-$1,000 to do the job. Having collision/comprehensive on that car would have been a complete waste of money and would have required me to lose a perfectly good car.

Instead, I spent less than the yearly premiums for coll/comp on the repair and kept the car for many more years.

Last time I bought a car on credit I dropped collision immediately after paying off the loan.
That was an Accord 3 y.o. when I bought it and payed off the loan in 2 years.
My current Toyota I paid cash when it was 1 y.o.
Put collision on /w $1000 deductible for one year, until I got familiar with it.
Risky, but I’ve saved enough money over the years to cover a mulligan.

The answer really depends on your financial situation. In general, insurance only makes financial sense if it covers a loss that you couldn’t afford to cover yourself or that would be a major hardship for you to cover. I’d guess that your car is worth somewhere around $5,000 (but you need to figure out the correct value here). What would the impact of a $5,000 loss be to you? Would you still be able to purchase a decent replacement car?

A $1500 bumper / grille accident would bite with no collision coverage. Having a 250 or 500 deduc is almost same premium in most cases.

When you do not have a loan that requires it, and when you are able and won’t mind taking a total loss on it if you wreck it. Simple as that. The other thing is, if you are in an accident that is not your fault, you can have your car immediately repaired while your insurance company goes after their insurance company (if any). Otherwise you are on your own. Its like having a legal retainer.

Dealer retail on an SE 4-cyl automatic with ABS and optional air bags and 120,000 miles is about $6000. There is still a bit of value in your ar if it is like this one. Call your insurer and ask them how much you would save if you raised the deductible to $750, $1000, and $1500. There might be a higher deductible that is a lot more affordable.

“Call your insurer and ask them how much you would save if you raised the deductible to $750, $1000, and $1500”

My vehicle is only 3 years old, and has a book value of ~$21k, and I am carrying a collision deductible of $1,500. If somebody is not accident prone (I have not had an accident of any kind for 43 years), and if paying a couple of thousand dollars isn’t going to take food off of my table…Why should I not boost the deductible in order to save money every year on the insurance premium?

I don’t know anything about the OP’s driving record or his/her financial situation, but I think that it is worthwhile to consider a substantial boost in the deductible for collision coverage.

I discussed changing the deductible on one of my cars with my agent and it wouldn’t really save me that much so I just decided not to. I’ve got zero, $50, $100 and $200 deductibles on various cars and various elements of the coverage and it hasn’t cost me that much. But for sure check it out. Your results may vary.

There’s no absolute answer as there is always a degree of risk, but I think somewhere around the 5 year mark is where it starts to make sense to drop collision on econo-boxes.

When the car is paid for, that is you own it, it’s usually better to become “self-insured”…There are exceptions, as in driving a high-value vehicle as a daily driver…

If you can afford to replace your current ride with something equivalent and not suffer financial hardship, you may not need collision insurance. Conditions are different for different people. For instance, my dad had a 10 year old Chevrolet in 1949. His job depended on him finishing his degree. We lived in the country and had to have a car. He carried collision insurance which was fortunate because we slid off the road and into a rock bank while on a trip. The collision insurance took care of repairing the car which he couldn’t afford with his meager savings. On the other hand, when I was completing my degree, we didn’t have children. I had enough savings that I could replace my 5 year old 1965 Rambler with suitable transportation, so I gambled and dropped the collision. I reasoned that if the accident didn’t completely total the car, it could be repaired with used parts. Even if the colors didn’t match and I elected to not have paintwork done, I would still have transportation. In any event an uncovered loss can be deducted from taxes. In my case the risk of not having collision insurance paid off.

I drop collision and comprehensive coverage as soon as I am able to, meaning that there is no loan on the car. If I pay cash for a car I never have comp or collision. I also raise the deductible to $1000 on every car I own.