Collision Coverage Break-Even Calculator
Determine how many years of collision premiums equal your car's net payout — and whether keeping collision coverage still makes financial sense.
How the Break-Even Calculation Works
Collision coverage pays out your car's actual cash value minus your deductible if the car is totaled. The break-even point is how many years of premiums you'd pay before they equal that payout:
- Net Payout = Car Value − Deductible
- Break-Even Years = Net Payout ÷ Annual Collision Premium
- If break-even is more than 7 years, the math suggests dropping collision and self-insuring.
Remember: cars depreciate annually at roughly 15–20%, so even if break-even is 6 years today, your car will be worth far less in year 6.
Frequently Asked Questions
When should I drop collision coverage?
A common rule of thumb: if your annual collision premium exceeds 10% of your car's value, collision may not be worth keeping. If your car is worth $8,000 and collision costs $900/year, you're paying 11.25% annually — dropping it likely makes sense.
Does my lender require collision coverage?
Yes — if you have an auto loan or lease, your lender will require comprehensive and collision coverage until the loan is paid off. You cannot legally drop it while financing the vehicle.
What is the actual cash value (ACV) of my car?
ACV is the market value of your vehicle at the time of a claim, accounting for depreciation. It is not the original purchase price. Use Kelley Blue Book or NADA Guides to find your car's current ACV.
Should I raise my deductible to lower the premium?
Raising your deductible from $250 to $1,000 can reduce your collision premium by 15–40%. This makes sense if you have emergency savings to cover the higher deductible and your car's value is moderate.
What happens if I drop collision and have an accident?
You'll pay the full repair cost out of pocket. If your car is totaled, you receive nothing from your insurer. Only drop collision if you can afford to replace the vehicle without an insurance payout.
Disclaimer: Results are estimates only. Actual coverage decisions should account for your full financial situation, loan requirements, and local rates. Consult a licensed insurance professional.