When Should You Not Have Collision Coverage
Drop collision when your car is worth so little that the payout, after your deductible, wouldn't be worth the premium you're paying for it.
A family decides on their teen's older car
A parent added their teen to the family policy and put the teen on the older sedan they'd been planning to replace anyway, a car with a lot of miles and a modest resale value. The quote for full coverage on that car, with a new teen driver on it, came back high enough to make them stop and do the math.
They looked up what the car was actually worth, checked the deductible they'd chosen, and realized that if the car were totaled, the insurance payout minus the deductible would barely cover a couple years of the collision premium they were about to pay. They dropped collision on that car, kept liability coverage in place since that's required, and put the teen on it instead of the newer family vehicle. They kept full coverage on the car worth more. The decision lowered the bill without leaving them exposed on the only car where a big loss would actually hurt.
Will dropping collision now hurt me later if my teen needs a different car?
No, this decision isn't permanent and it isn't tied to your teen specifically. Collision coverage is attached to a vehicle, not a driver, so if your teen moves to a different car later, you make this same calculation again for that car, fresh.
If the family car situation changes, say the teen gets their own newer car down the line, you'd look at that car's value at that time and decide again. Dropping collision on an old car now doesn't lock you out of having it on a different car later. The only thing to watch is your state's rules and your insurer's rules about adding coverage back, since some have waiting periods or inspection requirements if you want to add collision after dropping it, so check before you assume you can switch back instantly.
Once you know which cars still need collision coverage, compare quotes to find the best price for exactly that.
Why this comes down to the car's value, not the driver
Collision coverage exists to pay for damage to your own car after an accident you caused, up to that car's actual cash value, minus your deductible. That payout ceiling is the whole reason this decision is about the car and not about who's driving it. A new teen driver raises the chance you'll file a claim, but it doesn't raise what the insurer will ever pay out for that specific car. If the car is only worth a small amount, the most you could ever collect is a small amount, no matter how many years you've paid for the coverage.
This is why the math changes as a car ages. Every year a car is worth less, the ceiling on a payout drops, but the premium for collision coverage doesn't drop at the same pace or automatically at all. At some point the premium you'd pay over a few years gets close to or passes what you'd ever collect, and that's the point where carrying the coverage stops making financial sense.
Where this plays out differently is when you couldn't afford to replace the car at all without the insurance payout. If a totaled car would leave you without a way to get your teen, or yourself, to work or school, the payout matters even if it's modest, because modest money is still more than none. It also plays out differently if you're still financing or leased on the car, since those agreements usually require you to carry collision and comprehensive for as long as you owe money on it, so you don't actually have the choice until the loan is paid off.
The other variable is what you chose as your deductible. A high deductible shrinks the payout further, and on an older car that can tip the math toward dropping coverage sooner than you'd expect.
This is a math question about the car's value, not a safety question about your teen.
What is a car actually worth for this calculation, and how do I find out?
It's the actual cash value, what the car would sell for in its current condition right before the accident, not what you paid for it or what you think it's worth sentimentally. Look up your car's make, model, year, mileage and condition using a vehicle valuation tool, or ask your insurer directly what they'd estimate it at, since that's the number that matters for this math, not a private sale listing price. Check this every year or two since the value keeps dropping as the car ages.
Does dropping collision affect comprehensive coverage too?
No, they're separate coverages and you can drop one while keeping the other. Comprehensive covers non-collision events like theft, weather, or animal strikes, and it's often cheaper than collision, so many people keep comprehensive even after dropping collision on an older car. Check your policy to see what each one costs separately, since bundled quotes don't always break that out clearly, and decide on each based on the same value math.
Is there a way to lower the collision premium instead of dropping it entirely?
Yes, raising your deductible is the most direct way, since a higher deductible lowers the premium while keeping the coverage in place for larger losses. This works best if you have enough savings to cover the higher deductible if a claim happens, so check what you could comfortably pay out of pocket before raising it. It's a middle option between full coverage and dropping collision altogether, especially useful while a car's value is still dropping but hasn't hit the point of not being worth insuring.
