Knowing When to Drop Collision and Comprehensive Insurance Coverage

From Insurance for Dummies by Jack Hungelmann

When deciding whether a vehicle’s value has decreased enough to drop one or both of these vehicle damage coverages altogether, you apply the same four to five year payback guideline. The only difference is that the extra risk you’re assuming is the full value of the vehicle ( less any salvage value collectible from a junkyard).

Assuming an old Chevy has a junk value of $300 and would cost $2,500 to replace with an equivalent automobile, the net risk is $2,200 (the $2,500 value less the $300 salvage value). Dividing the $2,200 risk by the Collision and Comprehensive premium will give you the payback period. Drop the coverage if the payback period is five years or less.