Question: I do not think I need collision coverage for my car anymore. When can I get rid of it?
Answer: This is a tricky question. Its a lot harder to answer than you think and there is no one right answer. But there are some guidelines.
First, if you have a loan on your car, you are almost always required to have collision coverage. Typically, they will even specify that you must have a $500 deductible, although not every lender has that specific requirement. So, if you have a loan, you cannot get rid of the collision coverage.
Second, if your car is worth more than $5,000, it generally makes sense to keep collision coverage. At that point, your savings in dropping the coverage is not going to outweigh the loss of the car.
Third, if you cannot afford to replace your car should it be damaged, then you need collision coverage. So, if your car costs $2,500 and you cannot either buy a replacement car for $2,500 or cannot get a loan for a car, you should keep your collision coverage.
But what if you want to save money on your premium? Then you should consider raising your deductible. If you increase your deductible from $250 to $500 you will save a significant amount of money. Of course, check with your agent or broker for your specific savings.
These are general rules. If you have questions, you can always email email@example.com to discuss your situation at no cost.