It depends on which coverage(s) you’re asking about.
Some important coverages should be kept at responsible limits regardless of a vehicle's age. Liability, Personal Injury Protection and Uninsured Motorist coverages transfer risks of loss due to injury and medical expenses. The potential for those losses does not change as your car ages.
The average life span of modern cars is now 12 years, according to S&P Global Mobility, while the costs of repairing and replacing vehicles are at all-time highs.
Removing comprehensive and collision coverages are options some drivers choose as a car gets near the end of its life cycle. But everyone’s circumstances
are unique.
The average driver has a collision claim once every 13 years, according to the Insurance Information Institute. A common approach is to consider removing physical damage coverage when the annual premium approaches one-tenth of the car’s value. For example, this would apply if your vehicle is worth $6,000, and comprehensive and collision coverages costs $500 per year with a $1,000 deductible.
This is a great question to discuss with your Agent.
Jeff Ryan is president of the Ryan Agencies located in Jasper, Hornell and Wellsville, New York.
Echoing what Jeff said, I think it really varies based on the situation.
Another consideration to keep in mind is that comprehensive and collision coverages pay for repairs if your vehicle is damaged, as long as the repairs cost less than the market value of the vehicle. If the repairs are more expensive, the insurance company will total out the vehicle and pay you the market value. So, for example, if your car is valued at $6,000, but the damage it incurred costs $8,000 to repair, it will be totaled.
Removing those coverages should generally only be considered if the value of the vehicle decreases to the point that you can afford to pay out of pocket what the insurance company would provide for the market value. As Jeff mentioned, for many people, that 10% threshold is where waiving collision and comprehensive might become a viable option.
But everyone’s risk tolerance is different, so this is really one of those instances where it’s best to talk with your Agent, who can speak specifically to your situation.
Christy Kager is president of Piper Insurance Agency, located in Painted Post, New York.
