If you’re driving an older vehicle, you’ve probably wondered whether you’re throwing money away on comprehensive and collision coverage. After all, why pay hundreds or even thousands annually to insure a car that might only be worth a few thousand dollars? Let’s break down what you actually need and when it makes sense to scale back.
Isaiah Interiano
Farhan Husain
The Coverage You Can’t Skip
No matter how old your car is, liability insurance is non-negotiable. This covers damage you cause to others and their property, and it’s legally required in almost every state. Even if your 2005 Honda Civic isn’t worth much, the Mercedes you might rear-end certainly is.
Most states require minimum liability limits, but these are often inadequate. Consider carrying at least:
- $100,000 per person for bodily injury
- $300,000 per accident for bodily injury
- $100,000 for property damage
Medical bills and lawsuits can quickly exceed state minimums, but the good news is that the extra cost for higher limits is usually modest. The Insurance Information Institute helpfully put together this document showing each state’s minimum insurance requirements.
The Coverage You Can Reconsider
Comprehensive and collision coverage — often called “full coverage” — pays to repair or replace your own vehicle. This is where owners of older cars can potentially save some real money.
Here’s a simple rule of thumb to consider: If your annual comprehensive and collision premiums exceed 10% of your car’s value, it might be time to drop them. For example, if you’re paying $800 annually for these coverages on a car worth $4,000, you’re paying 20% of the car’s value each year just for the possibility of a claim.
Remember, even with full coverage, you’ll still pay a deductible (typically $500-1,000) before insurance kicks in. On a $4,000 car with a $1,000 deductible, the maximum payout would only be $3,000.
The Middle Ground Approach
You don’t have to go all-or-nothing. Consider these strategies:
Keep comprehensive, drop collision. Comprehensive typically costs less and covers things you can’t control — theft, vandalism, weather damage, and hitting a deer. Collision covers accidents you cause, which you have more control over through safe driving.
Raise your deductibles. If you keep comprehensive and collision, raising deductibles from $500 to $1,000 can reduce premiums by 15-30%. Just make sure you have the higher deductible amount saved.
Consider usage-based insurance. If you don’t drive much, some insurers offer programs that track your mileage and could significantly reduce your rates.
When to Keep Full Coverage Anyway
Even on an older car, full coverage might make sense if:
- You couldn’t afford to replace the car if it were totaled
- You’re still making loan payments (your lender requires it)
- Your car is a classic or appreciating in value
- The coverage is surprisingly affordable due to your location or driving record
The Bottom Line
Take 10 minutes to run the numbers. Check out your car’s actual cash value on Kelley Blue Book or Edmunds, compare it to your annual insurance costs, and consider your financial situation. Could you handle replacing the car out of pocket if needed?
For many drivers with cars worth less than $5,000, dropping comprehensive and collision while maintaining robust liability coverage is a sweet spot — protecting against catastrophic financial loss without overpaying to insure a depreciated asset.
Just remember: the goal isn’t to have the cheapest insurance possible — it’s to have the right insurance for your situation. Sometimes that means accepting that your trusty old car is worth more to you than to an insurance company, and adjusting your coverage accordingly.
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