Can You Drop Insurance for a Low-Value Car?
Learn about state insurance mandates and the restrictions related to being uninsured.
Q. My car is 10 years old and I hope to drive it to 200,000 miles. But I know it’s not worth more than $1,500. Can I drop my insurance?
A. Here’s what you need to know to make the right decision for your situation: Auto liability is a mandatory coverage in most states, so you must keep that insurance in place. However, comprehensive and collision coverages—which cover the physical damage to your car—are optional. To gauge whether it’s cost effective to carry those physical damage coverages, follow this rule of thumb: If your car is worth less than 10 times the amount you’re paying for comprehensive and collision coverage, consider dropping them. Research the current book value of your car using the N.A.D.A. Official Used Car Guide. One note: Some lien holders may require you to carry physical damage coverage.