How can I reduce the cost of collision coverage?

You can do one of two things: raise your deductible or drop your coverage altogether. The deductible is what you pay out of your own pocket before your insurance kicks in. The higher the deductible, the lower your premium. For example, increasing your deductible from $200 to $500 could reduce your collision cost by 15 percent to 30 percent, according to the Insurance Information Institute. Increasing it to $1,000 can save you 40 percent or more, according to III.

If you have an older car with high mileage, collision coverage may not be worth the money. Let's say your older car suffered major damages. Your insurance company would likely decide to total it because the cost of fixing it exceeds a substantial part of its market value. Your insurer would then pay you the car's actual cash value, minus your deductible. The money you would receive for the vehicle may not justify the premiums you are paying for the collision coverage.

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