Decent Newsroom
Sign In

Is Collision Coverage Still Worth It on an Older Car? A 10% Test with Real Numbers

By Smart Budget Sheets November 11, 2026
When collision and comprehensive cover stop paying off on an older car.

Car insurance on an old car can keep rising even as the car loses value. The part worth checking is collision and comprehensive cover: the coverage that pays to repair or replace your own car.

The 10% test

Add up what collision and comprehensive cost you per year (your insurer can split the premium by coverage). Compare it with the car’s market value minus your deductible.

  • Car value: $4,000
  • Deductible: $1,000
  • Most a claim can pay: about $3,000
  • Collision + comprehensive cost: $520 a year

$520 is about 13% of the car’s value and 17% of the most you could collect. Many people treat 10% of the car’s value as the point where this cover starts to look expensive.

Two questions before you drop it

  1. Could you replace the car from savings? If losing the car tomorrow would mean a high-interest loan, keeping the cover, perhaps with a higher deductible, may still be worth it.
  2. Is there a loan or lease? Lenders usually require collision and comprehensive until the loan is paid off.

Middle options

  • Raise the deductible from $500 to $1,000 and compare the saving.
  • Keep comprehensive (theft, hail, falling trees, glass) and drop collision; comprehensive is often the cheaper part.
  • Keep liability limits high. Liability protects your savings when you damage someone else’s car or injure someone, and it does not lose value as your car ages.

Budget it

If you drop the cover, move the yearly saving into a car replacement fund each month. After a few claim-free years the fund itself becomes your insurance.

Free tools

General information, not financial advice. Figures are rounded examples.

#personalfinance #budgeting #carinsurance
Write a comment