Is collision insurance worth keeping on my car?December 21, 2012: 6:30 AM ET
I have a 2008 Honda Accord with about 24,000 miles that was purchased in 2007. The last payment has been made. Should I drop the collision insurance on the car? I have read that if a vehicle is five years old that coverage is not needed. — Welton S.
A good rule of thumb is to keep collision coverage until its annual cost exceeds 10% percent of the value of your vehicle, says Philip Reed, Senior Consumer Advice Editor at Edmunds.com, an online auto site based in Santa Monica, Calif.
According to the Kelley Blue Book, a 2008 Honda Accord sedan is worth about $12,000 in fair condition. So if you're spending more than $1,200 a year on collision insurance, consider dropping that coverage. "But that 10% guideline is pretty conservative," says Reed. "If you're in cost-cutting mode, then you might want to drop collision when it costs 7% or 8% of the value of the car."
One last consideration: Take a look at your driving record before making changes. "If you've filed claims like this in the past, you might do it again," says Reed.
— Austin Kilham
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