Do I need full coverage on an old car?
Once a car is paid off, full coverage stops being required — but that doesn't automatically mean you should drop it. Here's how to decide.
When full coverage is required
If you’re financing or leasing your car, the lender requires collision and comprehensive coverage for as long as you owe money on it. Once the loan is paid off, that requirement disappears and the choice is entirely yours.
The 10% rule of thumb
Compare the yearly cost of full coverage to about 10% of your car’s current market value. If full coverage would cost more than that, it’s often no longer worth carrying — a claim would rarely pay out more than the car is worth anyway.
What you give up by dropping it
Dropping collision and comprehensive means you’re on your own for repairing or replacing the car after an accident, theft, or weather damage. It’s a reasonable trade for an older, lower-value car — less so for one you’d struggle to replace out of pocket.
