Welcome to CNBC Select’s Insurance Pro column. Every other week, I answer your policy and coverage questions, from home and auto to life insurance. If you have a question you’d like answered, you can submit it here.
CNBC Select reporter Jason from Pennsylvania asks:
When’s the right time to ditch collision or comprehensive coverage for a car? I have an older second car that costs around $150 per year for collision and comprehensive with a $2,000 deductible. The Kelley Blue Book value is just under $5,000 and I own it outright.
This question has been edited for clarity.
I found myself in a similar situation in 2025 when covering my previous car, a 2015 Chevrolet Volt. Comprehensive and collision coverages typically pay out when policyholders require repairs or vehicle replacement and add to your car insurance costs. At some point, the insurance premiums may not be worth the expense, as you could receive a small payout for a car that has a relatively low value. That’s especially true if you also have a high deductible. While replacement costs for a comparable car might also be low, the amount you receive could be quite small.
If you’re considering this move, here’s what you need to know:
Dropping comprehensive and collision auto coverage
What is comprehensive and collision coverage and when is it required?
Comprehensive and collision insurance are sometimes optional parts of car insurance — they both cover the repair or replacement costs associated with a covered vehicle.
Collision coverage kicks in after an accident with another vehicle or object, while comprehensive pays out after a non-accident-related incident, like theft, storm damage or vandalism. Neither comprehensive nor collision coverage is required by law in any state.
However, it is required by the terms of a lease or loan agreement. If you don’t have an auto loan, like Jason, it’s your call whether to buy this coverage.
Of course, you still need liability insurance — which is the part that pays for bodily injuries or property damage you cause to others. Almost every U.S. state requires some amount to drive legally. There may be other requirements, like first-party medical benefits or personal injury protection. Limits and requirements vary by state.
In Pennsylvania, where Jason is based, minimum required coverage is $15,000 for bodily injury per person involved in an accident, $30,000 total bodily injury coverage per accident, $5,000 for property damage per accident and a $5,000 first-party medical benefit per person.
Since collision and comprehensive coverages are a choice in Jason’s situation — congrats on having a paid-off car — he gets to make the call.
When to drop comprehensive and collision coverage
You can do some math to determine whether comprehensive and collision coverage are worth the costs. A longstanding rule has been to drop it when your car is worth less than 10 times the premium, according to the Insurance Information Institute. You can find your car’s value through Kelley Blue Book — an industry standard for auto pricing.
Jason’s premiums cost $150 per year, or $1,500 when multiplied by 10. By that math, he should keep his comprehensive and collision coverage. However, the answer could be more nuanced than that.
Another factor is at play: the deductible, or the amount you’d pay out of pocket for claims. Typically, you don’t file claims for damage worth less than your deductible. Jason’s is relatively high at $2,000 — just about 40% of the car’s value.
While a higher deductible keeps your premium down, it means you won’t get much or any benefit from filing a small claim, and it would eat into what you’d be compensated if your car were totaled.
Additionally, since lowering your deductible would raise your premium, the math would skew more toward dropping comprehensive and collision coverage. It might even be worth getting a few quotes to see what the math would look like with a lower deductible before you make a final call.
Many insurance brands offer quotes online. We also like the AI-powered tool Jerry for comparing quotes quickly with just one search.
Jerry.ai
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Highlights
Jerry is an AI tool that allows drivers to compare auto insurance policies from dozens of insurers in minutes. You’ll need to provide personal information, including your name, address, phone number and vehicle information, but it gives you estimated rates from several insurers.
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Availability
Jerry is a licensed insurance agency inall 50 U.S. statesand Washington, D.C.
Pros
- Reduces the comparison shopping process to minutes, not hours
- Compares potential rates from dozens of insurers in one place
Cons
- Requires downloading the mobile app to see rates
Only drop coverage if you’d be comfortable repairing or replacing your car on your own
I can’t stress enough that there’s no issue with keeping comprehensive and collision coverage if you need it. For example, keep the policy if you can’t afford to replace the car, wouldn’t have reliable transportation without it or you’d have a hard time absorbing the financial shock of this loss if something happened. Paying $150 per year would be well worth it in any of these scenarios.
If you can afford to replace the car and meet a few other conditions, you could certainly go without it. In fact, that’s what I did in a similar situation. My premiums and car value were just about at the break-even point. I started to view this less as a math question and more of a personal comfort decision.
Like Jason, I had a relatively high deductible that would have been a good portion of my car’s value. I asked myself a few questions before deciding to cancel:
1. I looked at my emergency fund: I was fine replacing the car with something of a similar quality.
2. I looked at its use: My husband and I have another car, and I don’t depend on the Chevrolet for necessary travel, like commuting.
3. I considered the amount of risk the car was in: It spent most of its time parked in a garage, so it was relatively sheltered from non-accident damage.
Based on this, I decided to forego both comprehensive and collision coverage. If your answers are similar to mine, you might decide to call it quits and go with only the coverages required in your state. Ultimately, when making this choice on a low-value car, it’s about assessing the amount of risk you’re willing and able to assume.
What to do if you drop comprehensive and collision coverage
If you decide to drop the coverage and don’t need the $150 for something else, I suggest diverting that money to an emergency fund. If you need to pay your deductible or replace the car, having more cash on hand wouldn’t hurt.
I’m a big fan of Betterment’s Cash Reserve high-yield savings account because it lets you subdivide your savings toward individual goals. I put the funds from my comprehensive and collision coverage into emergency savings, so that if anything happened to the car, I’d be closer to funding the repair or replacement.
Betterment Cash Reserve
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Annual Percentage Yield (APY)
4.25% APY (including the 0.75% boost)
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Minimum balance
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Monthly fee
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Maximum transactions
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FDIC insurance coverage
Pros
- Above-average APY
- Opportunity to boost APY for 3 months
- No monthly fee
- Unlimited withdrawals
- FDIC insurance up to $2 million
Cons
- Boosted APY is only for new Betterment customers
- $10 minimum deposit
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