Should I Buy Collision Insurance on an Older Car?
Insurance Q&A: “Should I buy collision insurance on an older car?”
Well, the choice may not be up to you. If you don’t own your car outright, whether it’s new or old, you’re usually required by contract of the loan agreement to carry full physical damage coverage, which includes collision and comprehensive coverage until the loan is paid off. Period.
The lienholder, or any other loss payee, will want to ensure the car loan is eventually paid off in full, which becomes difficult if the car is totaled and can’t be driven anymore. Owners tend to stop making payments in such events…
In addition, gap coverage may be necessary if you owe more money on the car than it’s worth. Insurance companies aren’t in the business of insuring cars for what you owe on them, but rather for what they’re worth (actual cash value), or the cost to replace them in some instances.
However, if you own your car outright, collision coverage is entirely optional. You’ll need to ask yourself if the car is worth insuring, an answer likely based on your personal financial situation and risk appetite.
The older a car is, the less it’s generally worth (minus vintage classics). The less it’s worth, the less it costs to insure for physical damage. This alone helps the average driver maintain physical damage coverage on any vehicle, old or new.
If the car is old, but you like the shape it’s in and couldn’t afford to repair it if it’s damaged, you may want to opt for physical damage coverage.
Remember, if you don’t have collision coverage and you are at fault in an accident that renders your car inoperable, you could well be stuck taking the bus.
On the other hand, if you can afford to repair or purchase a new car in the event yours is damaged, you may want to forego the coverage and save the extra money. Especially if you’re not attached to the vehicle.
If it’s strictly a matter of money, I recommend getting an online quote or quotes from an insurance agent to determine if you’re getting the right coverage at the right price.
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