When to Reduce Your Car Insurance Coverage

April 23, 2024

Every state has minimum insurance requirements for car owners, specifically bodily injury and property damage liability. Whatever the minimums are, your insurance has to cover them no matter what, but as your car ages, you may consider scaling back on your optional physical damage coverage to save money.

But when is the right time? Preferably when the math works out, saving money in premiums for a little additional risk may be worth it.

The following is a rough guide on car insurance coverage that you can use to determine what is appropriate for you and your vehicle.


Fresh off the lot

If you are financing your car, the lender will require that you carry collision and comprehensive coverage. But even if you paid cash for that new car, it makes sense to protect your investment.

Comprehensive coverage covers anything that might happen to your car, like hail damage, if someone hits your vehicle in a parking lot and runs, or if it is vandalized. In this case, the insurance covers the value of the damage (minus your deductible).

Collision is almost the same as comprehensive, except that it covers any damage to your vehicle from damage like hitting another car or backing into a tree.


Close to paying off your loan (car 2-5 years old) 

Once you pay off the loan, if it's still between two and five years old, generally speaking,  you should keep comprehensive and collision coverage, as you would still be out of pocket considerably if it is totaled or stolen and not recovered.


6 to 11 years old

At this point, you may want to consider getting rid of your comprehensive coverage. But before you do that, you should determine what your car is worth in the resale market, using the Kelley Blue Book or Edmunds.com.

Whatever is in the Kelley Blue Book is what your insurer would pay you if the car is totaled based on the mileage, condition of the car, etc.... Would you be okay losing that much if your car is totaled or stolen, or if it suffers significant damage?

Compare how much you save every month in premiums and determine for yourself if dropping comprehensive and collision coverage is worth it.


Twelve years and older

If you're still paying full coverage at this point, the value of your vehicle may no longer be worth the burden of the higher premium.

One option is to ditch collision coverage, which tends to be more expensive, but keep comprehensive, which will still cover your vehicle in case of a broken windshield, that parking lot hit-and-run, and theft.

As always, you can call us at 781-289-7445 or email me at dan@rizzoinsurance.com .  We can help you determine what coverage is best for you.