Full insurance coverage, which encompasses collision and comprehensive protection, is a good idea for people who are driving a new (or relatively new) car. It provides protection from physical damage due to an an incident which involves striking another vehicle or an object in the collision part of the policy.
Comprehensive coverage pays for damage caused by events other than a motor vehicle accident involving a collision. It pays for repairs to the car stemming from events like fire, vandalism, hail and flooding. This part of the policy also pays out based on the vehicle’s cash value if it is stolen and not recovered.
Since full auto insurance protection pays out based on the vehicle’s cash value and not how much it would cost to replace the car (or even what the owner paid for it originally), the time to consider dropping full auto insurance coverage is when the vehicle’s cash value drops to approximately the same level as the policy deductible. At that point, the advantage to the owner of keeping this level of protection in place is negligible.
Full auto insurance coverage accounts for a good portion of the cost of insurance. It doesn’t make good financial sense to continue paying for insurance where the amount of benefits payable under the policy continues to drop over time. A vehicle owner an drop the collision coverage entirely and keep fire and theft protection in place so the owner will receive some compensation for those types of losses.