When to Drop Comprehensive Car Insurance

If you finance your car, you may not be able to cancel comprehensive car insurance. If you own your car and the value is less than your insurance rates, you can cancel comprehensive car 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 27, 2021

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Here's what you need to know...

  • Comprehensive coverage covers a multitude of incidents
  • If you own a car then you most likely have liability insurance since that is required by the state
  • If your car is valuable and in great condition, you may want to consider comprehensive car insurance

A couple of different factors will help you determine when to drop comprehensive car insurance. Comprehensive car insurance is important, especially for a newer car that still has value or for a car that is being financed or leased.

Comprehensive car insurance is not required by the state, so it’s considered an optional insurance plan.

Comprehensive car insurance covers a multitude of incidents. It takes care of almost everything that’s not related to an accident, such as a golf ball through your window or a car thief who is successful.

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Why comprehensive car insurance?

If you own a car then you most likely have liability insurance since that is required by the state. However, if you don’t buy any other insurance then your own car is not covered by anything.

Two of the most common types of insurance to put on your policy are collision and comprehensive. Both of these types of insurance are financial protection for your own vehicle.

Collision insurance covers your own vehicle damage if you are at fault for an accident. Comprehensive insurance covers your own vehicle damage for just about everything else.

Whether your car gets damaged in a parking lot by a kid riding too close on his bicycle, comprehensive car insurance will pay for the repairs to your car per your policy. It also covers basic incidents, such as fire and theft.

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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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Who requires comprehensive car insurance?

The state only controls you having proof of financial responsibility for liability.  However, if you are not the actual owner of the car because you are financing it, then you will most likely be required to have comprehensive car insurance as an obligation of the loan.

If you buy your car outright, then you’re not required to carry comprehensive car insurance.

However, if your car is new then you owe it to yourself to make sure you have financial protection for your asset.

If your car is brand new, you may want to consider comprehensive car insurance. How much can you afford to lose if something happens to your car? Can you pay for repairs if it gets damaged? Can you afford a new car if yours is totaled?

When should I remove comprehensive insurance?

Deciding when to drop comprehensive car insurance depends on a couple of different things. The age and mileage of the car are both factors to consider.

Even if you have a lot of money in the bank, keeping comprehensive car insurance makes good business sense because insurance is much cheaper than the cost of a new car.

This gives you ongoing protection against any non-collision related incidents. If you buy a brand new car and pay it off in four years, then your car is most likely still in excellent condition and has still retained a good amount of its value.

Of course, there does come a time when comprehensive car insurance is really no longer necessary. Cars depreciate somewhat quickly, so, even if you have your car for a number of years, it may still have a sufficient amount of value that is worth insuring.

In the extreme cases, old automobiles that are really considered clunkers, comprehensive car insurance may not be as necessary. If your car is only worth a couple of hundred dollars, then comprehensive insurance is probably not a concern for you.

Once your car has depreciated significantly, you can drop comprehensive car insurance. In the meantime, enter your ZIP code below and start comparing FREE car insurance quotes for comprehensive coverage now!

References:

  1. https://www.allstate.com/tools-and-resources/car-insurance/liability-car-insurance-cover.aspx
  2. https://www.iii.org/publications/insurance-handbook/insurance-basics/auto-insurance-basics
  3. https://www.allstate.com/tools-and-resources/car-insurance/what-is-comprehensive-auto-insurance.aspx
  4. https://www.transportation-dictionary.org/Non-Collision_Accident
  5. https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System

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