When Should You Drop Full Coverage and Collision on Your Old Car?

With the cost of living rising, many Florida drivers are looking for ways to cut expenses.

One common strategy is removing full coverage and collision insurance and keeping only the minimum required coverage (PIP and PDL).

However, before making this decision, it’s essential to evaluate your vehicle’s current market value.

When Does It Make Sense to Remove Full Coverage and Collision?

According to Nerdwallet, the average full coverage insurance policy in Florida costs around $3,968 per year, while a minimum coverage policy costs about $911 per year.

The main reason to drop these coverages is vehicle depreciation. As your car’s value decreases, it may no longer make financial sense to pay for expensive insurance premiums and deductibles.

Example Scenario:

If you pay $3,900 per year for full coverage insurance and have a $500 deductible, but your car’s market value is $5,000, your maximum payout in case of total loss would be $4,500.

In this case, dropping collision and comprehensive insurance could save you about $3,057 per year, which could be set aside for future expenses or a new car purchase.

Key Factors to Consider Before Cancelling Coverage

✔ Vehicle Value: If your car’s market value exceeds $10,000, keeping full coverage may be a better option, as it provides a higher payout in case of an accident.

✔ Additional Costs: Consider out-of-pocket costs for vandalism, a broken windshield, or unexpected damage, such as a tree branch falling on your car.

✔ Strategic Savings: Some car owners choose to deposit their savings from lower insurance premiums into an emergency fund or a new vehicle fund, allowing them to handle unexpected expenses without depending entirely on insurance.

Important Note:

If you purchased your car with a loan, lenders require you to maintain full coverage and collision insurance until the loan is fully paid off.

Conclusion

The decision to drop full coverage and collision insurance depends on your car’s value and personal financial situation.

If your car is old and worth less than $5,000, opting for minimum coverage and redirecting the savings to other financial goals is a smart move.

However, if your vehicle is still worth around $10,000, or if you prefer comprehensive protection, keeping full coverage might be the better choice.

For more tips on car insurance in Florida and strategies to save on insurance premiums, contact the Univista Insurance specialists today!