Is paying an extra $200 per month for collision coverage worth it?
I’m a new driver with a vehicle valued at around $16,000. My monthly insurance premium is approximately $420 with collision coverage, but drops to about $220 without it. Given that I can’t afford to replace my car if something happens, that extra $200 does seem significant. However, saving $2,400 a year is tempting too. How often do people actually file collision claims?
Deciding whether collision coverage is worth the extra $200 per month really depends on your personal circumstances and risk tolerance. Here are a few factors to consider:
Vehicle Value: With your car worth around $16,000, collision coverage could help cover repairs or replacement costs if you’re in an accident, especially since you mentioned you can’t afford a new vehicle outright.
Accident Frequency: Consider how often you see drivers getting into accidents. New drivers tend to be at a higher risk for incidents, so having coverage might provide peace of mind.
Financial Situation: Evaluate your financial situation. Would paying out-of-pocket for repairs or a replacement be feasible? If an accident happened, would you struggle to cover those costs?
Deductible: Look at your collision coverage deductible – how much would you have to pay before the insurance kicks in? If it’s high, the coverage might not be as beneficial.
Personal Preference: Insurance is all about risk management. If having the coverage makes you feel more secure while driving, it could be worth the extra cost.
Ultimately, if you can swing the additional cost and prefer having the security of collision coverage, it might be worth keeping for now, especially as a new driver. However, if the savings of $2,400 a year would significantly improve your financial stability, you might want to consider dropping it, especially after you gain more experience and confidence on the road.