Author: Claims Consultant Robert L. Mertig
I have read many articles recommending that consumers cancel the collision coverage on their vehicle's car insurance policy once it reaches a certain age. However, my many years spent in the field of insurance has shown me that this is almost always a bad idea. Authors often present cancellation as a way to save money, arguing that there is no reason to carry collision coverage on an older model vehicle. They reason that, due to the lower value of an older vehicle, the vehicle's worth does not justify the coverage cost. However, this is a half truth; it means nothing unless you are able to absorb the loss if the vehicle is wrecked and you are the at fault party. For instance, you may be able to pay a few dollars a month more in your auto insurance bill for collision coverage, but if your vehicle was destroyed in an accident that was your fault, you may not be able to afford the several thousand dollars needed to replace the vehicle. In my experience, collision coverage does not greatly increase the cost of your policy.
Comprehensive coverage, which offers protection from fire, theft, vandalism, flood and broken glass, also does not cost much more per month. If your windshield was broken, however, the cost to replace the windshield could easily be in the hundreds of dollars, outweighing the relatively minor cost for comprehensive coverage.
Unfortunately, many of us are "penny wise and pound foolish", and are tempted to drop the collision and comprehensive coverages on an older vehicle. I urge all insureds to reconsider dropping this coverage unless they are prepared to pay in full for the consequences.