When to Drop Collision and Comprehensive

Rule of thumb: drop collision and comprehensive coverage when the car is paid off and its actual cash value (ACV) is less than roughly 10x the combined annual premium. A $20,000 car with $400 of annual collision + comp pays itself out of a single total loss. A $3,000 car with $400 of coverage will usually not. There are four conditions that should all be true before you drop; miss any one and keep the coverage.

The four conditions (all must be true)

1. The car is paid off. Lenders require collision and comprehensive. A lease requires it too, usually at higher limits than a loan.
2. You can self-insure the total-loss replacement. Can you comfortably write a check for the car's current value without borrowing?
3. The vehicle value is less than roughly 10x your combined annual collision + comprehensive premium. At less than that ratio, you're paying more in premium over 10 years than the car is worth.
4. You carry adequate uninsured-motorist property damage (UM-PD) in the states that offer it. UM-PD can partially substitute for collision in a crash caused by an uninsured driver, but it does not cover self-collision or non-collision losses.

The math worked out

• Example 1: 2018 Honda Civic worth $12,000, $420/year coll+comp. Ratio: 12,000/420 = 28.5x. Keep the coverage.
• Example 2: 2010 Toyota Camry worth $4,500, $380/year coll+comp. Ratio: 4,500/380 = 11.8x. Borderline. Keep for one more year unless cash-flow strained.
• Example 3: 2008 Nissan Altima worth $2,200, $340/year coll+comp. Ratio: 2,200/340 = 6.5x. Drop. Save $340/yr; even if you total it, cost = $2,200.

Factors that argue to keep it longer

• Your cash position is thin (no emergency fund that could absorb a total loss).
• Vehicle is your only transportation and losing it would affect income.
• You live in a hail-prone or theft-prone zip code (comprehensive is doing meaningful work).
• You have a teen driver on the policy (collision frequency is materially higher).
• Vehicle has significant sentimental or non-replaceable value (classic, inherited).

What you lose when you drop

• Collision claims: any damage from a collision with another vehicle or object (even single-vehicle crashes) comes out of pocket. See collision coverage.
• Comprehensive claims: theft, vandalism, hail, falling objects, animal strike, windshield glass are all unpaid. See comprehensive coverage.
• Loss-of-use (rental reimbursement): this coverage is triggered by collision or comprehensive. Without them, rental reimbursement doesn't pay. See rental reimbursement.
• Vanishing / disappearing deductible benefits cease to apply.

Dropping only comprehensive (not collision) or vice versa

Some carriers allow you to carry collision without comprehensive, or vice versa. This is rarely the right trade: comprehensive premium is usually less than one-third of the physical-damage premium, and non-collision risks (theft, hail) tend to be the cheaper line to insure. If you're only going to drop one, drop collision first; the typical cost savings are larger and the self-collision frequency for an experienced middle-aged driver is relatively low.