When to Avoid Full Auto Insurance Coverage

Keeping full auto insurance coverage in place isn’t always the right choice for vehicle owners. Collision and comprehensive insurance pay out based on the car’s cash value, which decreases over time. While a driver who has taken out a loan to finance his or her purchase will likely have to keep full coverage in place as a condition of getting financing, once the car has been paid off in full it may no longer make sense to keep full coverage in place.

In that instance, the owner is paying a set premium for a level of protection that is decreasing over time. The vehicle owner is also required to pay a deductible every time he or she makes a claim against the policy. When the cash value of the vehicle is at or near the policy deductible, it’s time to consider making a change to the policy provisions.

At that point, the driver can drop the collision coverage and limit the comprehensive protection to fire and theft only. This step should help the owner save on the cost of his or her car insurance coverage, since the physical damage protection accounts for a good portion of what a driver pays for insurance.

Full auto insurance coverage should be kept in place on a new car and/or one which has been financed. Older model vehicles, which have a low cash value, probably don’t need to be protected to this extent.


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