If you have a vehicle that is worth less than $2,500 you should most likely opt to carry no collision or comprehensive coverage.  Collision is the part of your auto policy that protects damage to your vehicle while you are driving.  Once a vehicle reaches this minimal value, the cost of collision coverage becomes impractical.  You are better off to simply save the money and take this risk on yourself.  Comprehensive covers fire, theft, vandalism, and other losses that would not take place while your vehicle is being driven.  For the same reasons as collision coverage, I would not suggest comprehensive for a vehicle this old.

I understand that many people are hesitant to follow this strategy since losing their vehicle would be a significant financial problem for them.  The misunderstanding is that their insurance company would buy them a replacement vehicle or provide the funds for them to do so.  The amount of money that would be paid to repair or replace a 10 year old card would be minimal.  The insurance company is under no obligation to provide you with another car or even enough funds for you to find a suitable replacement.  Furthermore, even a small accident may create a claim that exceeds the entire value of the car, resulting in a check to you for maybe a few hundred dollars and the car being declared a “total loss” (totaled).

No matter how old your vehicle is, you always need to carry liability insurance (and are required to carry it by law, at least some minimal amount).  Liability insurance covers the damage that you do to other people, and their property.  The most common amount is 300/500 which is $300,000 per person or up to a total of $500,000 per accident.

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James L. Paris
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