When should I drop full coverage car insurance?

To see if you can drop full coverage auto insurance, subtract the deductible and full coverage rates from the present value of your car. If you can't pay that amount, don't drop full coverage auto insurance.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 20, 2021

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Here's what you need to know...

  • Typically older cars that have a lower resale value do not need full coverage
  • If your car is financed, however, you are required to carry full coverage
  • Make sure you look at all the factors involved before dropping full coverage
  • Understand that you can purchase different types of insurance, such as comprehensive car insurance, separately after dropping

You should only drop full coverage car insurance if you are confident that it makes sense financially to do so.

Take the time to do the math and find out how the value of your car fares in light of your insurance deductible and the premiums you pay annually.

You should never drop full coverage car insurance if your vehicle is financed.

Read on to learn whether you should drop your full coverage auto insurance policy. Then enter your zip code above for a FREE online auto insurance comparison!

Calculating Whether or Not To Drop Full Coverage


Look at a variety of factors when trying to decide whether or not to drop full coverage.

First, you should find out the actual blue book value of your car. Vehicles lose value rather quickly and you may be surprised to find how little your car is actually worth, even after just a few years of use.

You also need to know how much your full coverage, beyond what is required by law, costs per year.

To do the math, subtract the amount of your deductible and the amount your full coverage insurance is costing you from the present value of your car.

If the amount is a number that you could not afford to pay out, then you should probably continue to carry full coverage insurance. 

However, if the amount is rather insignificant, then you should simply drop full coverage and save the extra amount to cover damage from an accident or other types of loss.

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

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Financing Matters

If there is still a lien on your vehicle, this means that you share ownership of it with another entity.

Therefore you must carry full coverage so that if your vehicle is damaged, you will have the ability to make the necessary repairs.

If you were to drop full coverage from a financed vehicle, the lienholder will likely require you to repay your loan in full right away.

If you have realized that your car’s value and the high cost of full coverage insurance does not make sense anymore, focus on paying off the car in full, so that you can drop the full coverage insurance.

What is the cheapest full coverage car insurance?


If you have determined that you simply can’t drop full coverage car insurance, your next step is to shop around and find the best price possible on it in order to save money.

Shopping around truly is the key to getting the best price because the different companies offer different rates and discounts and have different rate setting guidelines.

Remember to compare more than just price when looking for new car insurance coverage.

Check into the customer service record of the insurers that are offering the best prices. You can get information through your state’s department of insurance.

In addition, you need to make sure that the insurer is financially stable before purchasing a policy. This information can be obtained through independent insurance ratings companies such as A.M. Best, Moody’s or Standard & Poor’s.

Get the information you need to make the right decision on your full coverage car insurance.

Start now with our FREE online quote tool to help you choose the most affordable policy to meet your needs. Enter your zip to start now!

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