Reduce coverage on older car

Consider Reducing Car Insurance Coverage as Your Vehicle Ages

Emmet Pierce

When you buy a new car it’s important to make sure it carries a full range of auto insurance protection, but you can save money by reducing coverage as the vehicle ages.

Insurance needs relate to the market value of your car. As the value decreases, you may find there are some coverages that are no longer necessary.

Optional Car Insurance Coverage vs. Required Coverage

Understanding what is mandatory and what is optional when building your insurance policy may help you save money in the long run.

What Does a Basic Auto Policy Consist Of? 

A basic auto policy consists of bodily and property damage liability, which most states require. This coverage protects you when you injure someone in a car accident or damage their car or property. Each state sets the minimum level of coverage.

Some states also require motorists to carry:

  • Personal injury protection. Provides reimbursement for medical expenses for injuries to you or your passengers.
  • Underinsured or uninsured motorist coverage. Kicks in when a driver with little or no coverage causes injuries or property damage. This is not available in all states.

What Are Optional Auto Coverages?

Many drivers add optional collision and comprehensive coverage for added protection.

  • Collision pays for repairing or replacing your car no matter who is at fault.
  • Comprehensive pays for losses not caused by collisions, such as fire, theft, vandalism, and broken glass.

While these coverages work well for newer cars, they may not make sense for older vehicles.

No matter how much coverage you have, your insurer won’t pay a claim that exceeds what your car is worth. Insurers often declare older vehicles to be total losses when the cost of repair exceeds their market value, noted Amy Bach, executive director of the United Policyholders insurance consumer group. In such cases:

  • You receive a check equal to your car’s value, less your deductible
  • The vehicle goes to a salvage yard.

When Collision and Comprehension Coverage May Be Required on Your Older Car

When you’re paying off an auto loan, you may be required to carry collision and comprehensive coverage, in addition to liability insurance. Lenders need to protect their financial interest in your vehicle until your loan is repaid. Once you own your car free and clear, you can decide whether cost of collision and comprehensive is worthwhile.

The Right Amount of Coverage for Your Older Car 

If you buy collision and comprehensive coverage for a car that is at least 10 years old, you may be paying too much for car insurance.

Tip:

Weigh what you are paying in premiums against what you are likely to get back from your insurance if your car is damaged, said Carole Walker, executive director of the Rocky Mountain Insurance Information Association.

The Cost of Comprehensive and Collision Coverages 

The average yearly price of a comprehensive policy is about $134 while the average price of a collision on policy is about $290 per year, according to the Insurance Information Institute.  Deductibles for collision and comprehensive typically range from $250 to $500, said Walker. While taking a high deductible can reduce your car insurance rates, be sure to have the funds on hand in case you need to file a policy claim.

“If you drop comprehensive and collision on an older vehicle it can be a smart choice,” she said. “You will save on premiums, but to understand that you will have to pay for repairs out of pocket, if you need to file a claim.”

Many consumers choose to err on the side of caution by keeping collision and comprehensive coverage for older cars, said Bach.
The piece of mind gained, may not be worth the money spent if the car is declared a total loss. According to Kiplinger, which publishes financial advice, insurers tend to declare a car to be a total loss if the cost of repair reaches 75 to 80 percent of the car’s retail value.

Take the 10 Percent Test 

Kelley Blue Book says if your annual cost for comprehensive and collision insurance exceeds 10 percent of the value of your car, you should consider dropping the coverage. If that’s the case, there’s a good chance that any insurance payout you receive following an accident will be less than the amount you paid for the added coverage.

Example:

Your car is worth $4,000. Your comprehensive and collision premiums cost more than $400 a year. It may be time to drop the coverage.

If your car is totaled and you feel that your insurer undervalued your vehicle, you can negotiate by providing examples of what people are paying for similar cars in your community.

Calculate Your Replacement Cost

Before cutting back on coverage for your older car, you should take time to figure out how much it would cost to repair or replace it if you had to cover the amount out of pocket. It may make sense for you to keep full coverage if your older car has maintained a high resale value.

Repairing older cars typically is less costly than newer vehicles, because they use less advanced technology. Replacement parts for older cars typically are less costly also.

What Is Gap Insurance and Do You Need It? 

Sometimes drivers owe a lender more than the actual value of their vehicle. If this is the case with your car, consider buying gap insurance. If your car is totaled, this policy will pay the difference between the actual cash value of your car and what you owe the lender.

“Anytime you have a lien, understand the fact that the insurance company will pay you what the car is worth, but your car loan may be more than that,” said Walker.

You can research how much your car is worth by contacting local auto dealers. Another way is by consulting auto buyer guides, such as theNational Automobile Dealers Associationor Kelley Blue Book.

Determine Whether Your Older Car is a Classic 

Most cars lose value as they age, but in some cases older cars attain a greater value by achieving classic car status. When that happens, drivers often can find discounts by buying classic car insurance.

Classic cars generally must be at least 25 years old. You typically can find the best price on classic car insurance if you work with an agent who specializes in such policies, said Bach.

Often, insurance companies give classic car owners a price break because (typically) classic cars are:

  • driven less often than most vehicles
  • often pampered, and saved for special occasions
  • less likely to be damaged or totaled in accidents
  • kept in garages, making them less likely to be stolen

Before you buy insurance for a classic car, you may wish to have its value appraised so your policy will accurately reflect its worth. This is especially important if you have made improvements that have increased its value.

If you decide to store your car during harsh winter months, you can save money by suspending your coverage. Just make sure that the car is roadworthy before returning it to the highway in the spring.

Adjust Your Policy

It’s good to periodically reexamine your level of car insurance coverage. As your protection needs change, so can your policy. A good goal is to have adequate coverage, but not more insurance than you need.

A broad range of protection may be the right choice when your car is new. As your vehicles ages and loses value, you can avoid paying for too much coverage by dropping the policy features that no longer make financial sense.

28 Responses to "Consider Reducing Car Insurance Coverage as Your Vehicle Ages"
  • Extra Mile Staff | May 26, 2020 at 4:25 pm

    Hi Nancy - For questions on your account, please contact our customer service center at 800.423.0567. Our agents are available Monday-Friday 7am to 11pm EST and Saturday and Sunday 8am to 6pm EST. Thank you!

  • Extra Mile Staff | May 26, 2020 at 3:09 pm

    Hello - Thank you for reading Extra Mile! For questions on your account, please contact our customer service center at 800.423.0567. Our agents are available Monday-Friday 7am to 11pm EST and Saturday and Sunday 8am to 6pm EST. Thank you!

  • Extra Mile Staff | May 26, 2020 at 2:42 pm

    Thank you for renewing, Alberta!

  • Barbara Waldorf | May 26, 2020 at 2:02 am

    When my car hit 10 years old my coverage was reduced. The Hartford did it themselves.

  • John H Shackleford | May 25, 2020 at 3:37 am

    I want my 1995 Honda Civic and 2005 Hyundai Elantra considered for "Classic Car" status if it lowers my annual premiums. They've always been kept in my garage when not driven and now only are used for transportation to casinos. stores, medical and dental appointments.

  • Florence Larry Perez | May 24, 2020 at 1:19 am

    its all about saving my money

  • donald phillips | May 24, 2020 at 1:18 am

    I rave a 97 Cadillac deville and a 04ford freestar ;; I put less than 5000 miles a year on both . can my insurance be lowered? I live in pa.

  • Sonya Johnston | May 23, 2020 at 10:37 pm

    My car is a 2010 Mazda CX7. It is 11 yrs old. Should I drop my coverage on it?

  • ROBERT PETTIT SR. | May 23, 2020 at 5:28 pm

    BECAUSE OF C19 RESTRICTIONS I HAVEN'T DRIVEN BUT A HUNDRED MILES SINCE MARCH 5TH. IS THERE A COMPANY DISCOUNT .

  • Nancy Nanarello | May 23, 2020 at 5:23 pm

    My daughter is driving a car that is covered by insurance in her name. However, the car is currently registered in my name. If she has an accident, could I be sued if anyone gets hurt?

  • Reta Smith | May 23, 2020 at 4:06 pm

    Yes my van now has over 103,000 miles on it, and it is 9 years old, but I very rarely drive it now. I moved into an apt. complex and very close to stores etc, so not putting much mileage on it now, also am somewhat disabled so now can park in the handicapped spots closer to the doors of the businesses. Am hoping to get a lower cost for my insurance, my income is so low, it is a struggle to pay the high cost! When it comes time in Oct. to get it renewed, I assume you will make those allowances for me, or I might need to shop elsewhere. Thank you for reading my comment!

  • W | May 23, 2020 at 3:33 pm

    I have a 2012 Honda Accord and a 2000 Chevrolet S10. The 20 year old S10 has 95000 miles on it. So it is not driven very much. With the age of the S10 do you have too much insurance on the truck. I have AARP Hartford insurance

  • Paul Rullo | May 23, 2020 at 3:02 pm

    How can i reduce my insurance coverage on my Acura TL 2008 know!

  • raymond scalea | May 23, 2020 at 2:54 pm

    I am 71yrs old and have 1 ridiculous!! speeding ticket I received ~2yrs ago It think it’s outrageous to increase my insurance rate by 50%!!!! I only drive to the supermarket once or twice a week. I’ve been solicited, as everyone has, by several insurance companies and since I’ve been living on social security for almost 20yrs now, it behooves me to consider saving money elsewhere if Hartford doesn’t reconsider my insurance rate. I can save a considerable amount of money if someone doesn’t take a look at my policy.

  • Alberta Bell | May 22, 2020 at 5:31 pm

    Many thanks, I needed this information before renewing my auto policy. Will go back and renew my coverage.

  • Earl H Wright | May 22, 2020 at 4:38 pm

    I need to review my policy to to see if i can get a better rate.

  • Lori | May 22, 2020 at 3:35 pm

    This makes sense but what if we get into an accident that is our fault? My car is 17 years old and probably worth not more that $2K at this point. I'm carrying full coverage.

  • Nancy Hossalla | May 22, 2020 at 3:13 pm

    Do car insurance companies periodically check your credit score? As your credit score increases that should help with lowering cost. The trouble with car insurance companies checking your credit score is then your score goes down. “You can’t win for loosing!”

  • Gloria J Pennington | May 21, 2020 at 10:20 pm

    MY CAR IS A 2008 PONTIAC G6. IT HAS LESS THAN 11,000 MILES ON IT. IT IS USED LESS THAN 50 TIMES A YEAR. I HAVE NOT HAD AN ACCIDENT IN ABOUT 18 YEARS. YOU CHARGE ME OVER $1,400 A YEAR. I SHOULD NOT BE PAYING FOR OTHERS ACCIDENTS. INSURANCE SHOULD GO DOWN EVERY YEAR YOU DO NOT HAVE AN ACCIDENT AND AS YOU CAR GETS OLDER. NOT BECAUSE YOU REDUCE YOUR COVERAGE.

  • Allan Ochsner | May 21, 2020 at 6:16 pm

    Question I have is I have 2 older cars that don't fit into classic cars but old enough and special enough that I feel full coverage is necessary. One is a 04 Corvette and the other is a 04 Thunderbird. Both have less than 30 K on them. Value would be more to replace with similar than actual BB value. Thoughts or suggestions on insuring these vehicles.

  • Does Car Insurance Decrease Or Increase As A Car Gets Older? – MoneyMink.com | November 21, 2019 at 7:34 am

    […] companies won’t even allow you to carry full coverage auto insurance on an older car. This is because it’s going to cost them very little to replace if something […]

  • Extra Mile Staff | August 14, 2019 at 12:37 pm

    Hi Gail, please call our Customer Service Department at 877-896-9320 and one of our representatives can gladly look into this for you. Thank you!

  • Gail Stewart | August 11, 2019 at 2:11 am

    I have dropped comprehensive and collision coverage on my 2005 Honda Pilot. When traveling with friends we like to share the driving. Is there a problem with me doing part of the driving of a friend's vehicle when I do not have the coverage on my own vehicle? My insurance is with The Hartford

  • Extra Mile Staff | January 25, 2019 at 1:46 pm

    Thanks for your feedback, Giselle! We hope to hear from you again soon.

  • Giselle Johnson | January 25, 2019 at 7:06 am

    I am excited to read the post and happy that you have stated genuinely good information in this blog. Hope more good things will come in future as well. Information stated in points is particularly easy to understand and it seems that it comes from valid sources. Thanks for this blog and looking forward to similar posts in the future.

  • Extra Mile Staff | September 24, 2018 at 3:37 pm

    Hi Jeffrey, great question! Insurance companies check your credit score when you’re getting a quote to calculate your insurance risk. If you are shopping for auto insurance, the insurance agent can provide you with more detail on how this process works and it is required.

  • Jeffrey Swartman | September 23, 2018 at 7:58 pm

    Do Car Insurance Check Credit?

  • Extra Mile Staff | April 20, 2018 at 11:42 am

    Hi Pamela, if you call our Customer Service Center at 1-800-423-6789, one of our representatives will be happy to review your auto coverage with you. Thank you!

  • Pamela A Mangelsdorf | April 18, 2018 at 9:18 pm

    I would like to discuss reviewing our car coverage.

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