11. Not Reviewing Coverage on Older Vehicles
As cars age and lose value, full coverage, meaning collision and comprehensive on top of liability, may no longer make financial sense. If your car is worth less than a few thousand dollars, the payout you would receive after a total loss might be less than what you have already paid in premiums for collision and comprehensive coverage over several years combined.
Once a year, check your car’s current market value using a reliable valuation tool and compare it to what you are paying for coverage beyond basic liability. In many cases, dropping the extra coverage on an older, lower value vehicle and redirecting that money into savings makes more financial sense than continuing to pay for protection that would barely cover a modest payout.
Quick tip: A simple way to decide is comparing your annual collision and comprehensive premium to ten percent of your car’s current value, if the premium is close to or higher than that, dropping the coverage is usually worth considering.