Do You Need Collision and Comprehensive Insurance on an Older Car?

As your vehicle ages, the question of whether to keep collision and comprehensive coverage becomes more relevant. These optional coverages are often part of a full coverage policy, but they may not always make financial sense for older cars with declining market value.

Understanding the Role of Collision and Comprehensive Coverage

Collision coverage typically applies when your vehicle is involved in an accident with another car or object, regardless of who is at fault. Comprehensive coverage generally applies to non-collision incidents such as theft, vandalism or weather-related damage. Both types of coverage are designed to help with repair or replacement costs, but they come with deductibles and premiums that can add up over time.

These coverages are often considered essential for newer vehicles due to the high cost of repairs or replacement. However, as a car ages and its value drops, the potential payout from a claim may not justify the ongoing cost of the coverage. If your car is worth only a few thousand dollars, you might be paying more in premiums and deductibles than you would receive in the event of a claim.

Evaluating the Value of Coverage for an Older Vehicle

When deciding whether to keep collision and comprehensive coverage on an older car, it helps to start with the vehicle’s current market value. If the cost of the coverage over a year or two approaches or exceeds what you could reasonably expect to receive from a claim, it may be time to reconsider. This is especially true if you have a higher deductible, which would reduce the payout even further.

Another factor to consider is how you use the vehicle. If it’s your primary mode of transportation and you rely on it daily, you may be more inclined to keep the coverage for added financial support in case of an incident.

Your financial situation also plays a role. Keeping the coverage might offer stability if you’re in a position where an unexpected repair or replacement would be difficult to manage.

Learn More

If you’re wondering whether it’s time to adjust your coverage, contact Discount Insurance to speak with an agent who can explain your options.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.