If you have an older car that has held its resale value than it may be worth the cost of full coverage (liability plus physical damage coverages), while if your 10 year old car is not worth much now it may be better for your situation to just carry liability on it. When you're wondering, "How much car insurance do I need?" the rule of thumb with car insurance is to buy as much insurance as you can afford.
I have a 2001 Toyota Tundra with 91,000 miles on it. I still maintain Comprehensive and Collision coverage. The truck is valued around $7,100. In my situation, I feel it is better to pay the premiums for Comprehensive and Collision coverage, because if I had an accident I only have to pay $250 (my deductible) to have it fixed. The premiums for those two coverages are only $350+/- a year. At some point, I may decide that instead of paying $350 a year, I would rather take the $7,100 risk of not being covered in the event of an accident. At this point, it is better for my situation to pay the premium in exchange for knowing I am covered.
With full coverage of Collision or Comprehensive your insurance company will pay you your vehicle's actual cash value (ACV) if it is in a covered loss. This typically means that the car is damaged beyond repair (or too costly to repair) or stolen. Normally if you want your car fully protected you will want to continue to carry these coverages until it stops making economic sense to carry it. In other words, you should stop carrying this coverage when your deductible and this coverage's premium starts to equal your vehicle's ACV.
Each person is different, but if you have a $500 deductible and the car's value is $5000 then the most you can recover in a total loss is $4500. You would then need to decide if it is worth it to you to pay the physical damage premium portion of your auto insurance in return with the option of recouping that money in the event of an accident. If the premium amount still makes economic sense to pay then you should keep the full coverage.
In order to determine if you think Comprehensive and Collision are necessary for your vehicle first determine the value of your 10 year old car. You than can weigh the value of your vehicle against your physical damage coverages premium, as well as the deductible amount you would pay if you needed to use the coverages.
An older vehicle that has a lowered ACV may not be worth the extra expense of Comprehensive and Collision coverage. You do not want to pay more for insurance than the vehicle you are protecting is actually worth.
If you decide want to keep physical damage coverages on the vehicle, you may see if you can lower your premiums for these coverages by raising your deductible. The higher your deductible the lower your rates should be however you do not want such a high deductible that you cannot afford to pay it out if you need to use your Collision or Comprehensive coverages. So if you can only afford a lower deductible you may pay more for your auto insurance premium but will be able to pay out the deductible if your car is damaged or totaled out.
If you decide that your vehicle does not need physical damage coverages any longer, you still will need to keep the state minimum Liability insurance on the vehicle. If your car is paid off and you thus own it in the free and clear than keeping full coverage on it is up to you. So it is a personal decision at what point in the car's life you want to take off these optional coverages.
To help you figure out the right coverages for you, try using our car insurance calculator. Figuring out car insurance can be confusing and this tool will help you understand better. Answer a few short questions and we will give you some car insurance guidance on limits, deductibles and what kind of coverage you need. Please read our insurance tips to learn more about deductibles.
Get free auto insurance quotes with CarInsurance.com for the coverages you decide are the best for your situation