Is it worthwhile to maintain collision coverage on older cars?
Collision coverage takes care of the cost of repairing your car if you’re in an accident, regardless of who’s at fault; comprehensive pays if your car is stolen or damaged by fire, flood, hail or wind. If your car isn’t worth much, why pay a premium for repairs on a vehicle you’ll probably replace if it’s badly damaged? Collision damage for an older car can cost more than the car is worth. If your car is worth a few thousand dollars it may not be cost effective to pay for this coverage. Tip: The rule of thumb — from the Consumer Federation of American group: Drop collision if your premium is equal to 10% or more of the value of your car. But remember that you generally can’t drop collision until your auto loan is paid off. Tip: Check the value of your old car in the “National Automobile Dealer’s Association Official Used Car Guide,” known as “The Blue Book.” Auto dealers, banks and libraries have copies.