When Should I Drop Comprehensive Coverage on My Older Car?

When Should I Drop Comprehensive Coverage on My Older Car?

Carrying comprehensive automobile insurance coverage on a newer car can be a very smart idea. If your vehicle is financed, comprehensive coverage may even be required by your lender. When, however, should you begin to question the value of paying for comprehensive coverage on an old beater?

As mentioned, if you have a loan on your vehicle, you may not have a choice. Your bank or lender may ask that you carry comprehensive coverage on your car for as long as they hold the note, or title, to the vehicle. This protects their interests in the event your car is severely damaged.

The more challenging question comes when you no longer owe money on your vehicle. You may be paying a significant amount to cover it not just for liability but for damages it sustains in an accident or if it were to be stolen. You may even be hoping it will be stolen.

The point is, value for the coverage you receive may not warrant the higher premiums you may be paying. This can be particularly true if you have a high deductible.

Generally, many experts believe you should not pay for comprehensive and collision coverage if your premiums exceed about 10% of your vehicle’s value.

In a real-life example, let’s say your vehicle’s actual cash value is $5,000. If you have a $500 deductible on your comprehensive coverage, the MOST you could recover if your car were “totaled” in an accident or never recovered if stolen is $4,500. Most experts would suggest if your premium to carry comprehensive coverage on that vehicle is $450 annually, (10% of the maximum $4500 the insurance company would pay) you should consider dropping your comprehensive coverage.

Of course, you need to keep in mind all states mandate minimum coverage for liability insurance, so we are not suggesting dropping insurance entirely. There may come a point, however, when it is financially prudent to consider not carrying comprehensive coverage on an older car.

Of course, your situation may vary according to your personal finances and your ability to withstand a significant personal monetary loss. If you have any questions, we certainly invite you to contact us. Our independent agents can not only help in your decision to the amount of automobile insurance you should carry but can even help you find providers who may offer better rates for your specific situation. Contact us. Let us help you pay less for more.


Do you have questions about your insurance? Find an insurance agent near you with our Agent Finder

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Want to learn more about our blog writer?

Read more about KayLynn's background.

Click Here

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

First Jobs of Famous People

The Mundane Starts to Some Exceptional Careers

Sharpening the Marketing Axe For Your Business

How Using The Right Tools Can Take Your Business Marketing to The Next Level

Setting a Life Insurance Goal

You May Have Goals For Savings and Investments. What About Life Insurance?

Automotive British Speak

What The Brits Call Their Cars, Parts, and Features

The Benefits of Buying a New Constructed Home

See Why Many Younger Homebuyers are Choosing New Construction

When Did Super Bowl Halftime Shows Become Such a Big Deal?

For Years Traditional Marching Bands Served as Entertainment For NFL’s Biggest Game

Why You May Be Required to Have Business Insurance

While The Law May Not Require it, Other Factors May Dictate The Need For Business Insurance

Should You Have Life Insurance? HINT: Ask Your Spouse

Odds Are Your Spouse Would Want You to Have More Life Insurance Coverage

Changes in the Auto Industry You May Have Missed

The Brands, Models, and Features That Have Come and Gone

Six Things You Will Not Regret Splurging On

You Deserve to Have These Items Without Buyer’s Regret