Is it OK to not have collision insurance?

Asked by: Max Lubowitz III  |  Last update: October 5, 2025
Score: 4.9/5 (34 votes)

Collision insurance is important, but you're not required by law to have it. However, if your car is not fully paid off, your lender or lessor may require you to have it.

What happens when you have no collision insurance?

If you own your vehicle outright and choose not to carry collision coverage, you will have to pay to repair or replace your vehicle out of pocket if you're involved in a single-vehicle accident or found at-fault in an accident.

What happens if I decline collision insurance?

What happens if you drop collision insurance on your car. If you drop collision coverage, your car insurance premiums will probably go down, so you'll save some money. However, that savings could come at a cost if your car is damaged in an accident.

Do I really need collision coverage?

While people seem to believe it's the most important coverage, it really isn't. It's important, but it isn't the most important. Collision pays for your vehicle's repair/replacement if it gets damaged/wrecked. Fault doesn't enter into it.

Why would you not want to have collision coverage?

The reason people say collision isnt worth it on older cars is simple: The premium you pay may end up costing more than the value of the vehicle.

Should you drop collision coverage on car insurance?

33 related questions found

How much should I pay for collision insurance?

Collision insurance costs $382 per year, on average, and that is added on top of the cost of the other types of insurance that your state requires. The three major factors affecting the price of collision insurance are your driving history, the value of your vehicle, and the size of your deductible.

What type of insurance should you have on a paid-off car?

So, you'll want to maintain physical protection (your collision and comprehensive coverage) to protect it — these coverages are recommended as long your vehicle retains a worth of at least $4,000.

Is it better to have a $500 deductible or $1000?

Remember that filing small claims may affect how much you have to pay for insurance later. Switching from a $500 deductible to a $1,000 deductible can save as much as 20 percent on the cost of your insurance premium payments.

What happens if I don't put full coverage on my car?

Having only the minimum liability required by your state with no additional coverage leaves a large gap when it comes to repairing your vehicle after an accident.

Which person would most benefit from having collision insurance?

Final answer: The person who would most benefit from having collision insurance is someone who just purchased a new car, as it provides protection for their valuable investment. Others with older vehicles or those who use someone else's car infrequently may not need this insurance.

When should you drop full coverage on a car?

You should think about dropping your full coverage insurance policy if:
  1. You drive a high-mileage car. ...
  2. You struggle to fit the cost of auto insurance in your budget. ...
  3. Your car is worth less than the cost of your full-coverage policy. ...
  4. You have relatively high risk tolerance. ...
  5. You rarely drive.

Do I need uninsured coverage if I have collision coverage?

California law does not require you to carry uninsured motorist (UM) or underinsured motorist (UIM) coverage—so, legally, you don't need either one. However, UM/UIM is an important and commonsense coverage to carry.

Do I really need comprehensive?

If you don't have a loan or lease on your car, comprehensive insurance likely isn't required. And if the vehicle isn't worth much, it may not make financial sense to keep the coverage. Compare the value of your car to your comprehensive deductible plus the amount you pay for the coverage.

Can I add collision coverage after an accident?

Unfortunately you cannot add collision coverage after an accident and then use that coverage for the accident; your coverage only becomes applicable for accidents that occur after you add the coverage - not before. The date of the accident is what they look at, not when you file the claim.

Who generally pays more for car insurance?

Men tend to pay more for car insurance overall, though the difference is slight — about 1%. The difference is most pronounced for teens and young adults.

What does no collision mean?

Other Non-Collision - would include events such as: vehicle went airborne (driving off a cliff), injured in vehicle (load passes through rear window), gas inhalation (carbon monoxide), fell from vehicle, or thrown or falling object (falling tree/rock).

When should you consider not carrying collision insurance?

If your vehicle is paid off, there are only a few instances that justify dropping collision coverage: Your vehicle's value is less than a few thousand dollars: If your car holds minimal value, collision coverage may not be worth carrying. This is especially true when a large car insurance deductible is involved.

Is it good to keep full coverage on a paid off car?

Risk Tolerance: Full coverage can provide peace of mind by protecting your car from various risks, including accidents, theft, and weather damage. If you prefer the extra security, keeping full coverage might be worth it, even after the car is paid off.

What happens if I dont have full coverage and my car is totaled?

If you don't have insurance or don't have enough coverage, you're on the hook for the balance left on your vehicle even though the car is no longer drivable.

How much collision deductible should I get?

Before you choose a deductible, most insurance professionals recommend you figure out what you can afford to pay if your car is damaged in an accident. If your budget allows for a maximum out-of-pocket expense of $500, you probably should not choose a deductible higher than $500.

What does collision coverage cover?

Collision coverage

Collision pays for damage to your car resulting from a collision with an object (e.g., a telephone pole, a guard rail, a mailbox), or as a result of flipping over. The average cost is about $290 per year. Collision coverage reimburses you for the costs of repairing your car, minus the deductible.

Will raising my deductible lower my car insurance?

When you're choosing a deductible, keep in mind that you may be more or less comfortable with higher out-of-pocket costs vs monthly costs. A high deductible will lower your overall insurance rate, however it will increase your out-of-pocket costs if you file a claim.

Do I need a collision if my car is paid off?

Lienholders generally require you to have comprehensive car insurance coverage and collision car insurance coverage while you're paying off a loan. After the loan is paid back, and the lienholder is removed, you're no longer required to carry these coverages.

Does credit score affect car insurance?

How credit-based insurance scores work. Most U.S. insurance companies use credit-based insurance scores along with your driving history, claims history and many other factors to establish eligibility for payment plans and to help determine insurance rates. Again, except in California, Hawaii, and Massachusetts.

Is it better to pay out of pocket or claim car insurance?

If the repair costs are less than your deductible (or even slightly more) you should pay for the repairs out of pocket. For example, if the damage to your car costs $300 to fix, and your deductible is $200, you would save $100 by filing a claim.