Is paying an extra $200 a month for collision coverage worth it?
I’m a new driver, and my car is valued at around $16,000. My monthly premium is approximately $420 with collision coverage, compared to about $220 without it. Given that I can’t afford to replace my vehicle if something happens, that extra $200 a month feels significant. On the other hand, saving $2,400 a year is tempting. I’m curious, how often do people actually file collision claims?
Deciding whether collision coverage is worth the extra $200 a month really depends on your personal circumstances and risk tolerance. Here are a few things to consider:
Value of Your Vehicle: At ~$16,000, your car is valuable enough that collision coverage can be a significant safety net. If you’re in an accident, collision coverage can help cover repairs or replacement costs, which could easily exceed the cost of the premium.
Your Driving Experience: As a new driver, you may be more likely to encounter accidents or fender benders. Statistically, new drivers are often considered higher risk due to inexperience. Collision coverage can provide peace of mind as you build your skills.
Frequency of Claims: While it’s hard to predict how often you might make a collision claim, consider your driving habits. If you frequently drive in heavy traffic or difficult conditions, you may be at a higher risk of needing this coverage.
Financial Situation: You mentioned that replacing your vehicle would be a challenge. If an accident were to happen and you didn’t have collision coverage, you could face a significant financial burden. Weighing the cost of the premium against the potential financial impact of an accident is crucial.
Alternatives: If price is a major concern, consider assessing the deductible options on collision coverage—choosing a higher deductible could lower your monthly premium while still providing coverage if you need it.
Ultimately, if the peace of mind knowing you’re covered is important to you, maintaining collision coverage might be worth the extra cost, especially given your situation and the value of your vehicle. If you feel confident in your driving and are willing to take the risk, you might consider dropping it, but weigh that decision carefully.