THURSDAY, MAY 5, 2022
As your car grows older, the value of the vehicle generally goes down. This is in part due to the general value, but also the likely increase in miles and the swiftly changing landscape of new cars. When the value of your vehicle drops significantly, it may be time to reevaluate how much car insurance you have.
When is Full Coverage Car Insurance Required?
Most state laws only require a certain amount of liability, medical payments and/or uninsured motorist coverage for each driver. Full coverage is not legally required. However, many lenders will require you to carry full coverage as long as you have a loan on your vehicle. 
Once you have paid off your vehicle, the requirement for full coverage should disappear, giving you the power to decide whether or not you want to keep the coverage or lower it.
Full coverage car insurance is recommended in most cases, but there are valid reasons you would want to drop full coverage and instead carry the minimum legal requirements of your state.
Vehicle Value vs. Insurance Value
If the value of your vehicle is less than the cost to insure it, you may not want to carry full coverage on the vehicle any longer. In fact, some insurance providers won’t cover vehicles with total values below a certain threshold or if the car is over a certain age. This is in part due to the risk of an older vehicle needing a claim filed.
Even when your vehicle isn’t old, however, it is important to keep in mind the value of your vehicle. In some cases, you may have a car insurance policy but choose not to file a claim. If the cost of your deductible is less than the damages to your vehicle, you may not want to file a claim. For example, say you hit your mailbox with the back of your car and cost $500 in damage to your car. Your deductible is $1,000. Since the repairs cost less than your deductible, you may not be able to file a claim on your insurance.
The same applies to insuring your vehicle. If the cost to insure your vehicle is more than the value of replacing it, you will likely want lower insurance rates and simply purchase a replacement vehicle when the time comes. Overall, you should have the vehicle’s value appraised by an expert and speak with an insurance agent before making decisions about your coverage limits.
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