Why It’s Smart To Reduce Insurance Coverage On An Older Car

Reduce insurance coverage on older cars in order to lower your monthly auto insurance rates. Drivers aren't legally required to have collision or comprehensive auto insurance, and you can save money by having minimum liability insurance on an older car. We don't recommend reducing insurance on classic cars, but you can reduce insurance on an older car when you're paying more for insurance than the car is worth.

Free Auto Insurance Comparison

secured lock Secured with SHA-256 Encryption

Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

Full Bio →

Written by Rachel Bodine
Insurance Feature Writer Rachel Bodine

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

Full Bio →

Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Mar 11, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

When you’re looking for auto insurance savings tips online, you’ll see one tip that gets repeated frequently: if you own an older car, then you should reduce your insurance coverage.

Many people know about this tip, but not everybody knows why or how to reduce insurance coverage on an older car. Today, we’re explaining why doing so can help you save – literally – thousands of dollars per year.

You Don’t Legally Need Comprehensive or Collision Insurance on Your Vehicle

When we talk about “car insurance”, we’re not talking about one single insurance policy. We’re talking about a group of five or so different insurance policies.

As a legal minimum, all but one state in America requires you to have at least liability insurance. If you don’t have liability insurance, then it’s illegal for you to drive on the roads in that state.

Interestingly, New Hampshire is the only state that doesn’t require liability insurance. However, they do require drivers to prove they have sufficient funds to cover damage caused by an at-fault collision. Effectively, that means most New Hampshire drivers require liability insurance.

Liability insurance means that you’re protected against any costs or damage you may inflict on other people and property during the course of your driving – including bodily harm and property damage.

Liability insurance is the legal minimum. It’s also relatively cheap.

However, most of America’s drivers don’t have the legal minimum. Most drivers have comprehensive insurance and collision insurance:

Collision Insurance: Collision coverage covers damage to your car when your car hits (or is hit by) another object.

Comprehensive Insurance: Comprehensive coverage covers losses caused by something other than a collision, such as flood damage or theft.

Compare over 200 auto insurance companies at once!

secured lock Secured with SHA-256 Encryption

You May Be Paying More for your Insurance Than your Vehicle is Really Worth

Here’s my point with all of this information: if you drive an older vehicle, then you may be paying more for your insurance policy than your car is truly worth.

That means you’re paying more for your insurance policy than you would likely receive in the event of a collision.

In other words, you can save a considerable amount of money by dropping collision and comprehensive coverage from your insurance policy. It’s not legally required in any state.

By dropping comprehensive and collision insurance from your plan, you can save hundreds of dollars per year. Some people will even save thousands.

Don’t Immediately Spend the Extra Money You Save

So you just saved $100 per month on your car insurance plan. That’s great! You may be tempted to spend that money.

However, that’s not really a good idea. If you’re smart financially, then you’ll put that money in an emergency fund. If you do get into a collision, then you may need to pay for vehicle repairs out-of-pocket (or buy a new vehicle).

Basically, an emergency fund acts as your own insurance plan. The best part about this plan is that you get to hold onto your money. Instead of giving your money to your insurance company every year and hoping nothing happens, you can hold onto your money. In the best case scenario, that money is yours to keep when you retire your car from the road in the future.

When Should You Cut Collision and Comprehensive Insurance from an Older Vehicle?

This is a tricky question. There isn’t some specific vehicle’s age or mileage when you should absolutely cut comprehensive and collision insurance. There isn’t some vehicle value-to-policy cost ratio you need to check.

However, there are some general rules you can follow when deciding whether or not to remove collision and comprehensive insurance from an older vehicle.

If your vehicle suddenly needed significant repairs, would you decide to replace the vehicle?

Ask yourself this question. If your vehicle needs repairs, would that be the “straw that breaks the camel’s back”, so to speak? Would you look at the estimated repair bill, look at the value of your vehicle, and then just say “forget it”? If the answer is yes, then it may be time to drop collision and comprehensive insurance from your plan.

Check the Blue Book value and see how much your vehicle is worth

Use Blue Book or a local vehicle resale website to determine the value of your vehicle. This will help you answer the question above. The internet has made it very easy to determine the value of your vehicle – no matter how old or unique your vehicle may be, it’s unlikely to be the only vehicle in the world in that situation. Check the value of your vehicle, then use that number to determine if it’s really worth the price of your insurance policy.

Compare over 200 auto insurance companies at once!

secured lock Secured with SHA-256 Encryption

Classic Cars Are an Exception

There’s one important exception for everything we’ve listed above: insurance companies offer something called classic car insurance. Older, collectible vehicles may qualify for classic car insurance – but only if they’re used as your secondary vehicle. A 1990 Honda Civic is not a classic car, but a 1957 Chevrolet Bel-Air would be a classic car. Don’t immediately remove collision or comprehensive insurance from your vehicle just because it’s 60 years old!

By following the tips above, you can decide whether or not it’s smart to reduce insurance coverage on an older vehicle.

Free Auto Insurance Comparison

Compare over 200 auto insurance companies at once!

secured lock Secured with SHA-256 Encryption