Is Your Car Worth Keeping Full Coverage? When to Drop Collision and Comprehensive Insurance
- Charlotte Burr
- Mar 15
- 2 min read
When to Drop Collision and Comprehensive from Your Auto Insurance Policy There comes a point when keeping collision and comprehensive coverage on your auto insurance policy stops making financial sense. Instead of continuing to pay premiums, it may be smarter to save that money for repairs or a future vehicle.
Knowing when you’ve reached that point is actually simpler than most drivers think.
All cars depreciate in value over time.
It’s a well-known fact that the moment you buy a new car and drive it off the lot, it instantly loses thousands of dollars in value. After that initial drop, the depreciation continues at a slower but steady pace.
Typical vehicle depreciation looks like this:
Year 1: 20% depreciation of the vehicle’s original value
Years 2–10: 15% depreciation each year up until 10 years
Year 10: The vehicle is worth about 10% of its original cost
For example, after 3 years your $30,000 vehicle will be worth about $17,340. By year 10, that same vehicle may only be worth around $3,000.
If these numbers make one thing clear, it’s this: most cars are long term liabilities.
Use simple math to determine your cars worth vs the cost of insurance.
To decide whether it’s worth keeping collision and comprehensive coverage, you first need to know the current value of your vehicle.
You can quickly estimate this by using Kelley Blue Book :https://www.kbb.com/
Once you know your car’s current market value—which is typically what you would receive if your car were declared a total loss—you can compare it to what you’re paying for coverage.
Let’s say you’re paying $35 per month for collision and comprehensive coverage with a $500 deductible.
If you have an accident and file a claim, your total cost would be:
$35/month premium = $420 per year
$500 deductible
Total potential cost = $920
If your car is worth less than $920, you’re likely wasting money keeping that coverage.
Now let’s look at another example.
With a $1000 deductible and the same $35 per month premium, your potential cost would be:
$420 in annual premiums
$1000 deductible
Total potential cost = $1,420
If your vehicle is worth less than $1,420, it may be time to consider dropping collision and comprehensive coverage.
Or skip the math and follow this simple rule.
As a general rule of thumb, many insurance professionals recommend dropping collision and comprehensive coverage when your car’s value reaches around $3,000 or less.
At that point, instead of paying for extra coverage, you could set aside that monthly premium into a savings account. Over time, that fund can help cover repairs or contribute toward replacing your vehicle if something happens.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary based on state, insurance company, and type of policy
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