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Do I have to buy collision/comprehensive coverage for my car?

The collision portion of an automobile insurance policy covers damage to a car caused by an accident, while the comprehensive portion covers damage caused by fire, theft, flood and other perils. In all states, collision and comprehensive insurance is optional. However, if you took out a loan to buy a car or are leasing the car, the lender or dealer will require that you purchase the coverage. According to "Get a Financial Life" (Simon & Schuster), "After your car is about five years old or you've paid off your loan, you may want to consider dropping the collision and comprehensive coverage. To determine whether it makes sense for you to continue this coverage, consider the value of the car minus the deductible. Compare the answer to your annual premium." For example, you obviously don't need collision and comprehensive coverage if your car is worth only $1,000 or so and you have a $500 or even $1,000 deductible.