Updated: March 2016
Owning an older vehicle can have its advantages, from nostalgic value to potential cost savings if you own the vehicle outright. You may also be able to make money-saving adjustments to the car insurance coverage on your trusty old ride.
There are multiple ways to adjust coverage on an old car: You may choose to lower your limits, increase your deductibles or even drop certain coverages altogether. It helps to know what car insurance coverages are required by law (or by your lender) — and what each helps protect — before you make adjustments to your policy. Here are some things to consider if you have an older car.
Drivers in most states are required to carry liability coverage, regardless of the age of the car. Each state sets minimum coverage limits that you must purchase to insure your vehicle. The Insurance Information Institute (III) suggests increasing your liability limits beyond your state's minimum requirements, however, since liability coverage may help protect you from significant financial loss if you're sued.
Bodily injury liability coverage may help pay for expenses if you injure someone with your vehicle. It may help cover victims' medical expenses, income loss and legal fees.
Property damage liability coverage may help pay for damages you cause to someone else's car. It may also help cover damage to other property, such as fences, buildings, telephone poles and more.
Certain car insurance coverages are required in some states and not others. Check with your insurer or your state's insurance commission to see whether you'll need to carry the following coverages on your older car:
Uninsured/underinsured motorist coverage may help cover your medical costs if you're injured by a driver with no insurance or not enough insurance. In some states, this coverage may also help pay for damages to your vehicle if it's damaged by an uninsured or underinsured driver.
Medical payments coverage and personal injury protection (PIP) may help pay for your medical care if you or your passengers are injured in a car accident. Medical payments coverage may help pay for medical bills for doctor visits, hospital stays or surgery. PIP, which is not available in all states, may offer similar protection and also extend to lost wages, childcare and even funeral expenses as a result of a covered accident.
If your vehicle is paid off — in other words, if the car's title is in your name — some insurance coverages are optional. (Lenders typically require collision coverage and comprehensive if you're still paying off your vehicle, the NAIC says.) Depending on your needs and your budget, adjusting these coverages might be an option for your older car.
Collision coverage and comprehensive coverage help protect your car. Collision may help pay to repair your vehicle if you hit a stationary object, like a fence or a tree, or if you're involved in an accident with another vehicle. Comprehensive, on the other hand, may help pay to repair your car if it's stolen or damaged by something other than a collision (such as a falling object or a fire).
Both collision coverage and comprehensive coverage typically come with a deductible that you may be able to adjust. Keep in mind, however, that while a higher deductible can lower your premiums, you'd likely end up paying more out of pocket toward a covered claim.
Additionally, the III suggests that if your older car is worth less than 10 times the annual premium you pay for collision and comprehensive coverage combined, these coverages might not be a cost-effective option for you. In other words, you might want to talk to your agent about whether it makes sense to drop these coverages from your older vehicle's policy.
Towing & labor cost coverage
may help pay for services associated with roadside breakdowns, which may include towing, jumping a battery, changing a tire or assisting with a lockout. While this coverage is optional, it might come in handy in case you have problems with your older vehicle.
Of course, price should never be the only factor in choosing what kind of auto insurance you need for your "seasoned' car. An experienced agent can help you choose affordable coverage that still helps protects your car, your family and your assets.