When Should I Lower My Car Insurance Coverage?

As your car gets older, you may consider lowering the amount of auto insurance coverage on it in order to save money. Car insurance can be expensive, after all, and there is not always a need to maintain full coverage on an older vehicle which could be easily replaced. Before making any drastic changes to your auto insurance policy, however, it is important to speak with your insurance provider and consider your risks and options. 

What is the Value of Your Vehicle? 
One of the most important things to know is where your vehicle is valued. This will help you understand how much coverage you should have, as vehicles with higher value will generally need higher limits of insurance. For example, a car worth $35,000 may cost more to repair after an accident than a vehicle worth $10,000, so the $35k car will generally have higher insurance limits than the $10k car. Your vehicle’s value doesn’t remain consistent, however. As years pass and your vehicle grows older, it typically depreciates in value. Keep an eye on your vehicle’s value and the market to make sure that your car insurance is still reflecting your needs. 

In some cases, the value of your vehicle may depreciate until it would cost more to insure than to replace. If you pay $2,000 a year for car insurance and your vehicle’s value depreciates to $1,500, you may consider lowering your car insurance coverage in order to save money, as it would cost less to replace your vehicle than to insure it.  

How Much Car Insurance is Required? 
Of course, don’t forget that auto insurance is required by state law. Even if you lower your other auto insurance rates, you must keep a certain minimum of liability auto insurance in order to drive legally. Driving with a completely uninsured vehicle can lead to fines, license suspension, vehicle impoundment and even jail time. 

In Florida, for example, all drivers must carry at least: 

It is important to evaluate your coverage needs when it comes to your vehicle. Do you have a lot of uninsured drivers in your area? If so, you may want to keep uninsured motorist coverage. The same applies to coverages such as personal injury protection and collision coverage. Liability insurance on its own will not cover injuries you and your passengers may suffer after an accident, so you may consider keeping personal injury protection. 

When in doubt, speak with an insurance agent about your auto insurance needs and when it is the best time to lower your coverage.