When Should You Not Have Full Coverage Auto Insurance
Full coverage stops making sense when your car is worth less than what a year of premiums and a deductible would cost you if it were totaled.
Drop it when your car's value no longer justifies the cost
Full coverage pays to repair or replace your own car. Once that car is worth very little, the payout you'd get after an accident may not be much more than what you've spent on premiums to keep that coverage in place. At that point you're paying to insure a number that's shrunk out from under you.
The decision depends on your car's actual value, not its age or how it runs. A paid-off car in good condition might still be worth insuring fully. An older car with high mileage or body damage might not be. Check what your car is actually worth before you decide anything, since that number is the whole question.
What your car is worth, not what you paid for it
Look up your car's current value using what your insurer or a site like Kelley Blue Book would pay out, not what you paid for it years ago or what you think it's worth. This is the number that matters.
Compare that value to what you pay each year for comprehensive and collision coverage combined, plus your deductible. If your car is worth less than a few years of that combined cost, you're paying more to insure it than you'd likely ever recover.
If you still owe money on the car or lease it, you're required to carry full coverage regardless of its value. That requirement ends once the loan or lease is paid off, so this only applies to a car you own outright.
If something happened to the car tomorrow, think about whether you could replace it without the insurance payout. If you could, and the car isn't worth much, that's a sign full coverage isn't doing much for you anymore.
What you'd lose if something happened
Full coverage isn't only about the car. It's about what you can afford to absorb if you're at fault in an accident, or if your car is stolen or damaged by something other than a collision, like a storm or a fire.
Liability coverage, which is required almost everywhere, pays for damage you cause to someone else. It doesn't pay to fix or replace your own car. Without comprehensive and collision, you're covering that cost yourself.
Some drivers keep comprehensive coverage even after dropping collision, since it protects against theft, vandalism, and weather, and often costs less than collision does. Ask your insurer what each piece costs separately, since they're usually priced and dropped independently.
If you drive often, drive in a high traffic area, or park outside without a garage, the odds of needing that coverage are higher than if your car mostly sits in a garage and gets driven occasionally.
Questions people ask about this
How do I know what my car is worth before dropping coverage?
Ask your insurer for your car's current insured value, or look it up yourself through a valuation tool like Kelley Blue Book or Edmunds. Use the actual condition and mileage of your car, not a generic estimate for its year and model. This is the number to compare against what full coverage costs you each year.
Can I drop full coverage and keep liability only?
Yes, as long as your car is paid off and not leased. Liability coverage is what's required by state law in almost every case. Comprehensive and collision are optional once there's no loan or lease requiring them.
Will dropping full coverage lower my premium a lot?
It depends on your car, your driving record, and your insurer, since comprehensive and collision often make up a large part of the premium on an older car. Ask your insurer for a breakdown showing what each coverage costs separately before you decide what to drop.
Should I drop full coverage if I'm on a fixed income?
That depends on whether you could cover a repair or replacement cost yourself if something happened. If dropping full coverage frees up money you need now, and your car isn't worth much, it may be the right trade. If you couldn't afford to replace the car at all, think carefully before giving up that protection.
Does my insurer decide when to drop my full coverage automatically?
No. Your insurer won't drop your coverage for you based on your car's value or your age. You have to request the change yourself, and it only happens when you ask for it.
See what dropping full coverage would actually save you before you decide.
Get your car's current value from your insurer or a valuation site this week, and set it next to what you're paying for comprehensive and collision coverage. Call your insurer or agent and ask them to show you the premium broken down by coverage type, since most won't volunteer this unless asked. If you still owe money on the car, check your loan or lease terms, since they likely require full coverage regardless of the car's value. If the numbers show the coverage costs more than the car could ever pay out, ask your insurer what dropping collision, or both collision and comprehensive, would do to your premium. Make the change only after you've seen the actual numbers, not based on the car's age alone.
