Should I Buy Full Coverage on My Car Insurance?

This question is asked by almost every consumer who buys car insurance and has a vehicle that may be 5 or more years old.

At some point, you begin to wonder if the cost of full coverage car insurance is worth it since you may have never had a claim on that car.

The first step in making this decision is to get an accurate vehicle value from a service such as Kelley Blue Book. Once you have an approximate value of your vehicle, take a look at what you are paying for comprehensive (also called Other than Collision) and collision coverage.

One ballpark calculation used to determine if you should carry full coverage on your car is if your car’s worth is less than 10 times the cost of your premium, then it’s time to drop full coverage and carry liability coverage only.

So for example, if the cost of OTC and collision coverage adds up to $400 a year, and your vehicle is worth less than $4,000, then you might want to drop the full coverage.

Again, this is just a ballpark guideline and is not meant to guide you in your decision. You need to look at your own financial situation and make your decision.  If your vehicle is totalled in an accident (which wouldn’t take much damage), would you be able to purchase a different vehicle to replace it?

If not, then you might want to keep full coverage on the vehicle until you are financially able to absorb a total loss, or until you have an alternate vehicle available.

The decision to drop full coverage on your car is ultimately up to you and there is no ‘set in stone’ guideline for removing coverage.