Collision and comprehensive coverages: 4 things to think about

Should you drop your collision and comprehensive coverages?

I bought my first car when I was 17. My job provided just enough cash to throw down on a bright orange 1973 Volkswagen Super Beetle. It had no A/C, a leaky sunroof, and could go from 0 – 60 mph … eventually.

I loved that car. It had a splash of character which suited me perfectly, got crazy-good gas mileage, and although it took some skillful maneuvering to get my 6’5” frame in the car, there was just enough room to transport my belongings to college (just barely).

However, when it came to insuring my love bug, I had to decide whether my affection for my car was worth the cost of carrying collision and comprehensive coverage.

It can be a difficult call to make. But if you keep these things in mind, the decision will be a lot easier.

Collision and comprehensive coverage: the basics

The first thing to understand is how these coverages work. Then you can decide if one or both is right for you.

With collision coverage, the insurance company pays for damage to your car when you hit, or are hit by, another car or object—no matter who’s at fault.

Comprehensive coverage, on the other hand, covers fire, theft, vandalism or weather-related incidents. It also pays for damage caused by hitting an animal, and the costs of a rental car (for a limited amount of time) if your car is stolen.

There’s one more important thing to know. When you buy either of these coverages, you choose a deductible (typically $250, $500, or $1000). This is the portion you pay the repair shop for a covered claim. The insurance company pays the rest.

So, how do you decide if collision and comprehensive are right for you?

1. Determine your vehicle’s value

The first step is to determine if, frankly, your car is worth protecting with these coverages.

There are a number of resources to help you get a ballpark value of your car. Some of the most reliable sources are N.A.D.A Guides, Kelley Blue Book, and Black Book. Another option is to contact your insurance company to see how it determines the value.

Be realistic about the condition. Dents, torn seats, sun damage, etc. can lower the value. Location plays a role, too. All other things equal, a convertible is probably going to be worth more in California (where you have sunshine) than it is in Washington (where you have “liquid” sunshine).

2. Factor in the cost of the coverage

Insurance only covers you in the event of an accident. The rest of the time, you’re paying for the possibility that something might happen. Consider whether the cost is worth the risk.

You’d have to get a quote to know exactly what collision and comprehensive will cost. But, to give you a very rough idea, Progressive’s average collision premium is about $170 for a six-month policy term, and $60 for comprehensive. So, on average, customers pay $460 a year for these coverages.

Using that average as an example, a customer who’s paying $460 a year for collision and comprehensive, for a vehicle worth $2,500, is paying almost 20 percent of the car’s value every year for these coverages.

On the flip side, it’s worth noting that collision premiums usually decrease as your car gets older. That means it could be more affordable next year.

3. Keep your deductible in mind

Let’s say I choose a deductible of $500 and pay $170 every six months for collision coverage. If I have an accident, I’d pay $670 (my $500 collision deductible plus my $170 premium) to use collision coverage in that policy term. Comprehensive damage would cost me far less ($560), but the damage it covers is also less likely to happen.

So, ask yourself: does the amount your insurance company pays to fix your car actually help you after you’ve paid both the premium and your deductible?

4. Find out what options or services you might lose

Something else to consider are the things you might forfeit by taking collision off of your policy. Progressive customers who don’t have collision, for example, aren’t eligible for our Rental Reimbursement coverage.

Additionally, Progressive customers can choose to use our Service Centers to repair damage covered under their policy. If a customer doesn’t have the right coverage for their vehicle’s damage, this service isn’t available.

Check with your insurance provider to see what you might have to forego if you drop collision and comprehensive. Then decide whether these options and services are worth it.

Do your homework … weigh your options … make a decision

In my case, having collision and comprehensive on my bug just didn’t make sense.

As it turned out, I ended up getting in an accident and had to pay for the repairs myself. But the cost of the damage was far less than what I would have paid over the five years I owned the car if I’d had these coverages.

Your decision may not be as clear cut. You may decide to keep one of these coverages but let the other one go. So, do some homework—or talk with an agent—and weigh your options. When you’re all done, you might be surprised to find (like me) that the decision is easy.