If you’re thinking about ditching collision, don’t do it based on some imagined formula. Although most people drop it by the eighth year of ownership, there’s no hard-and-fast (fast and furious?) rule.
Or so I found out while researching “When to drop collision coverage – and risk it all” for Insurance.com.
You’re required to have collision until your auto loan is paid in full. It repairs or replaces your wheels when you’re hit by an uninsured driver or when you have an at-fault accident. (Damn you, black ice!)
Insurance.com analyzed data from half a million car insurance quotes and found that year eight is when the biggest number of owners bid adieu to collision. Some swear by “the 10 percent rule”: If the annual premium is 10 percent or more of the car’s value, better to bank those bucks against a replacement vehicle.
But it’s not always that simple. Collision coverage is another example of how those living on the margins pay more.