When to drop collision on an old car (and when not to)
Every spring I get the same call. The car is ten years old, paid off, the kids learned to drive on it, and the renewal premium just landed at $1,800 a year. The question is always the same. Should I drop collision?
The honest answer is: probably yes, but not for the reason most people think.
The math that actually matters
There are only two numbers you need.
- What's the car worth today? Pull the actual cash value. Kelley Blue Book, NADA, or your carrier can give you the number. Not what you paid. Not the trade-in price. The carrier's ACV at total loss.
- What are you paying for collision plus comprehensive in your premium? Not the whole policy. Just those two coverages. Your carrier will break it out if you ask.
Now divide. If you're paying more than 10% of the car's value every year for collision plus comprehensive, the math has gotten thin. If you're paying more than 15%, it's almost always time to make a change.
A 2014 Toyota Camry worth $4,500 with $700 a year in collision plus comprehensive premium and a $1,000 deductible? You're functionally insuring $3,500 of risk at a cost of $700 a year. Five years of that is $3,500. You've paid the car's value in premium without ever filing a claim.
What collision actually pays for
Collision pays when YOUR car is damaged because you hit something or something hits you. It does NOT pay for:
- The other person's car (that's your liability coverage)
- Your medical bills (that's MedPay or health insurance)
- Theft, weather, animal strikes, vandalism (that's comprehensive)
The decision to drop collision is purely about whether you want the carrier to write you a check for YOUR car if you wreck it. If you can absorb that loss out of pocket, the math gets easy.
The two mistakes I see every year
Mistake one: dropping comprehensive when you only meant to drop collision.
Comprehensive covers theft, vandalism, fire, weather damage, and animal strikes. It is dramatically cheaper than collision (often a third of the cost) and the risks it covers don't go away when your car gets old. A deer running into your fender on a back road costs the same to fix whether the car is two years old or twelve. Drop collision first. Keep comprehensive a little longer.
Mistake two: dropping collision while still financing or leasing the car.
If there's a loan or a lease on the car, the lender requires collision and comprehensive in the contract. Dropping coverage triggers a force-placed policy at three to four times the rate, paid by you. Always check the loan docs first.
A simple rule of thumb
For most clients we write:
- New car or financed car: keep both. Lender requires it, plus the depreciation hit on a total loss in years one through three is brutal.
- Mid-life car (3 to 8 years old, paid off): keep both unless premium starts approaching 10% of value.
- Older car (10+ years, paid off, low value): drop collision first. Keep comprehensive a year or two longer.
- Garage-kept low-mileage classic: completely different conversation, often better served with a collector-car policy.
What clients usually overlook
Two more things worth checking before you drop anything.
The deductible matters more than the coverage decision. Often the right move isn't dropping collision, it's raising the deductible from $500 to $1,000 or $2,000. The premium savings can be 15% to 30% with no other change. We model that for clients before we go straight to dropping coverage.
Your liability and uninsured motorist limits aren't going anywhere. Even when you drop collision and comprehensive, you still need real liability protection. Connecticut minimums are 25/50/25 and that is not enough. We typically recommend 100/300/100 minimum for any client with assets to protect. That decision is independent of what you do with collision.
Want a real review?
If you have a current declarations page, send it over. We'll tell you specifically whether your collision and comprehensive premiums are still earning their keep, whether a higher deductible would do the same job for less, and whether your liability limits are where they should be.