Whether or not you need comprehensive and collision insurance largely depends on the value of your car and whether or not you lease or finance your vehicle. Comprehensive and collision coverage are coverages that protect the value of your car. Collision coverage will pay to repair or replace your vehicle if you are at fault in a collision. In addition, comprehensive coverage will pay to repair or replace your car if it is damaged by something outside of an accident, such as from inclement weather, or if your vehicle is stolen.
If you finance or lease your car, you will likely be required to hold these coverages. If you have paid off your vehicle or purchased it outright, it will be your choice whether or not you would like to add this protection. This decision will likely be based upon the value of your car, the cost of coverage, and what you are comfortable paying out of pocket if damage occurs to your vehicle or it is stolen. According to NAIC data, 77% of consumers purchased comprehensive and 73% purchased collision coverage in 2016. It is suggested that when considering collision coverage, you should decline when six months of coverage exceeds 25% of the car’s value; it is no longer worth purchasing collision coverage, as collision coverage would cost more than replacing the vehicle. It is also advisable to drop collision coverage if your vehicle is older than ten years or worth less than $4,000.