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Comprehensive Coverage: When To Consider Dropping It

April 23, 2014

man in front of broken carComprehensive coverage is an optional coverage, but most people choose to carry it because it provides protection from a variety of different risks. Comprehensive coverage provides you with insurance against theft, vandalism, and other damage to your car resulting from a non-collision incident. Carrying this coverage does mean an increased premium, and many people wonder at which point their vehicle is old enough to stop paying the extra.

Why Carry Comprehensive in the First Place?

The reasons for carrying comprehensive coverage can help to make it more evident at what point you can stop paying for it. Many people carry comprehensive coverage along with collision coverage as options on their policy because they are required to do so by a lender. The bank or other institution that carries the loan on your vehicle can, and most often does, require you to carry these two options to protect their interests in the car.

Comprehensive coverage provides benefits for situations other than a collision. It can replace broken glass, help you get damage repaired from vandalism or fire, and get you a new car if your car is stolen and not recovered. This can be a valuable coverage, especially when your car is newer and expensive to repair or replace. Older vehicles may still benefit from this coverage as well, but many drivers wonder at what age it is no longer worthwhile to pay for the coverage.

Comprehensive Coverage and Older Cars

As a car gets older, it depreciates in value – unless it is a collector car that is rising in value due to its rarity. This means that the older a car gets, the lower the replacement value will become. At some point, paying for replacement coverage on your vehicle may be costing you more than it is worth.

There is no hard and fast rule for when you should drop comprehensive coverage, or collision coverage, which many people choose to drop at the same time. Because different cars depreciate at different rates, there is no set age at which it makes sense to drop the coverage. Instead, you should look at the value of your vehicle to determine when you feel comfortable going without replacement protection.

What Does Dropping Comprehensive Coverage Mean?

If you do not have comprehensive coverage on your insurance policy, you will not receive anything from the insurance company in the event that your car is stolen or damaged in some way. This means you are responsible for any repairs resulting from a non-collision incident, and you will not receive any payment to help you purchase a new car if the car is stolen.

As long as you are free of a car loan requirement, you can drop your comprehensive coverage any time you choose to do so. Find out how much your rates could drop by removing comprehensive insurance

When Should You Drop Comprehensive?

There is no reason that you have to drop comprehensive coverage if you prefer to keep it in place. However, when the amount that you are paying for the coverage starts to approach the value of the car, it makes financial sense to stop paying for it.

Consider how much you pay each year for comprehensive coverage, and then compare that amount to the current value of your vehicle. Remember to take into account the deductible on your comprehensive coverage. If you have a car valued at $2000 and a $500 deductible, the most you will get from the insurance company in a total loss situation is $1500.

It should be noted that as the value of your vehicle goes down, the amount you pay for comprehensive coverage will generally go down as well. The financial risk that the insurance company takes by providing the coverage lessens, and this means they charge you a smaller premium for that coverage. For some people, the small cost of keeping comprehensive, even on a car worth very little, is still worth it. This may be especially true if you can’t afford to replace your car should it become necessary.

As with all choices regarding the optional coverage on your car, dropping comprehensive is a personal decision that should be made based on the level of financial risk you are comfortable with taking on, and how much sense it makes to pay for coverage on a lower value vehicle.