When do you no longer need collision coverage on your car?

When you have an older vehicle that is of low value, you might be better off dropping collision coverage. Colorado requires you to have liability coverage-meaning insurance to cover damage you cause in an accident. The professionals at Compass Insurance in Centennial, CO can help you decide which policies are best for your situation. 

If you are in an accident and are at fault, liability coverage will cover damage to the other vehicle. In that situation, the collision coverage would pay for damage to your car. This would also be true if you ran your car into a tree or something and had damage.  If you owe on your car, the lending company probably requires you to have collision coverage. 

If you own your car outright there is a situation where you might want to not have collision insurance. The insurance company will not pay more than the market value of the car, regardless of how much coverage you have. If your car is worth $3,000, and it sustains $4,000 in damage, you will only get $3,000. The insurance company will declare it a total loss and will pay you only the market value.  You would still get the market value if you had collision insurance, so there is a bit of a risk factor to consider.

If you choose to go without collision insurance, another option is to have uninsured motorist coverage. While coverage is the law, not everyone obeys the law, so it is possible to get in an accident with a driver who has no insurance or means to pay for the damage he or she caused. In that case, uninsured motorist coverage would pay for your car’s damage if the accident were not your fault.

The value of your car that you own outright is the key factor in deciding what coverage you need. Call or visit the Compass Insurance agency in Centennial, CO and let them help you find the coverage that is right for your situation.