Gianetta Palmer is a writer for, copywriter, and essayist. Her work has appeared in, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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Should you decide to drop your collision or comprehensive car insurance, it’s simply a matter of contacting your car insurance company and letting them know. However, before you do, you need to consider your decision wisely. There are certain factors that undoubtedly played into getting collision and comprehensive to begin with, so make sure you’re adequately protected even if you do decide to drop them.

Rest assured that collision and comprehensive coverage are not currently required by law. Any requirements to carry such coverage are usually stipulations put in place by your bank or other lender in order to protect them while your loan is still outstanding. As long as you meet the obligations required of you under your loan contract, you should be free to drop your extra car insurance coverage without issue.

If I drop collision or comprehensive, do I still need liability insurance?

As a matter of law, every state requires some sort of insurance protection on any car driven on public roadways. The one exception to that might be certain states where agricultural vehicles can be covered under business insurance rather than car insurance. Where minimum liability coverage is required, most states mandate that it come through an existing car insurance company licensed to do business in that state. Some do make exceptions by allowing individuals to self-insure if they can prove they have the financial resources to do so.

What all this means is that you’ll still need some sort of liability protection even if you drop your collision and comprehensive coverage. Since you purchased your collision and comprehensive through a licensed insurance company, it’s quite likely that your state does not allow you to self-insure, or you don’t have the financial resources to do so. Therefore, you’re probably going to stick with your current insurance company to provide your state mandated liability coverage.

Can I drop collision and comprehensive coverage with an outstanding bank loan?

In all likelihood, you will probably be asked by your car insurance company to provide proof your loan is paid off if your collision or comprehensive coverage is a requirement of your bank. They do this to protect both you and your bank against significant loss in the event of an accident. Adequate proof would include a letter from your bank declaring the loan to be settled, or a new title issued from your state, which indicates all liens have been lifted.

In cases where the car insurance company doesn’t require proof, they are essentially trusting that you have paid your loan in full or made other arrangements with your bank. If this is not the case, and your insurance company finds out about it later, that could be cause for a rate increase. Furthermore, if your car is totaled, you will most likely be required to pay for its replacement on your own. It’s never a good idea to drop your collision and comprehensive coverage if you still have an outstanding loan.

If I cancel my collision and comprehensive coverage, will I get a refund?

Cancellation policies differ from one insurance company to the next, so it’s impossible to definitively say whether you’d get a refund if you cancel your collision and comprehensive coverage. In all likelihood, you will get something back as long as you cancel outside of the 30-day window prior to your renewal period. In other words, if your renewal period were April 1, you would probably get some sort of refund if you canceled sometime prior to March 1.

Details regarding your car insurance company’s cancellation policies will be included in your official policy documents. Make sure you read and understand what they say when you purchase new insurance coverage. If you have any questions, it’s a wise idea to sit with a representative who can explain things to you.

If you choose to continue getting the liability coverage with the same company it might be possible to apply any refund you’re due to your next policy renewal. If so, it’s a nice way to save a little money next time your insurance is up for renewal. If that’s not possible, any refund due will probably be sent through a company check or, if you used a charge card to pay your bill, a refund to that card.

How do I cancel collision or comprehensive car insurance?

Dropping your extra car insurance coverage is a simple process. You would simply call your insurance company or local agent on the phone and tell them of your plans. They’ll ask you the date you’d like the change to be effective, as well as the reason behind your decision.

Some may need documentation before they can drop the coverage but your agent will advise on the right process for cancellation. Typically, you’ll be able to send it via e-mail, snail mail, or fax. In the event that you are dropping your insurance to go with a new carrier, you often have to provide proof that your new insurance is already in force.

Dropping all of your car insurance without a new policy already in place requires you to also surrender your registration in most states. A failure to do so could result in suspension of your license and significant fines.

Collision and comprehensive insurance are great tools that provide good protection for you and your car. However, should you reach a point where they are no longer affordable or necessary, dropping them is very simple. Just make sure you’re fully aware of what you’re doing before you do so.