Should You Drop Collision Coverage on an Older Vehicle?

Last Updated on December 9, 2025

You’re not the type to chase the newest model. Instead, you’re proud to drive an older, paid-off vehicle that still runs well and doesn’t come with a monthly car payment.

The one bill you still have, of course, is your auto insurance. Many financial sites suggest dropping collision coverage on older, paid-off vehicles to save money—but they often ignore your personal situation, how much your car is worth, and what you can actually afford to risk.

Should you drop collision coverage? And if so, when? Below, we walk through what collision coverage does and how to decide whether keeping it makes sense for you.

Key Takeaways

Collision coverage is optional once your car is paid off, but dropping it too soon can leave you exposed to big repair or replacement costs.
Compare your car’s current market value to your annual collision premium (and deductible) to see if coverage still makes financial sense.
If you can’t afford to repair or replace your car out of pocket, keeping collision on an older vehicle may still be wise.
The decision to drop collision coverage ultimately comes down to your risk tolerance, driving habits, and financial cushion.

Table Of Contents

First Off: What Is Collision Coverage?
Deciding Whether to Drop Collision Coverage
FAQs on Dropping Coverage
Final Word – When Should You Drop Collision Coverage on Your Car?

First Off: What Is Collision Coverage?

Before you drop a coverage type, it’s important to understand what you’re losing.

Your auto policy may include comprehensive and collision coverage:

Comprehensive pays for non-collision events: storms, theft, fire, vandalism, hitting an animal, and similar losses.
Collision pays for physical damage when your car hits another vehicle or object, or if it rolls over—regardless of who is at fault.

Collision typically helps when:

You damage your own car in an accident you caused.
You back into a pole, wall, or other stationary object.
There’s a dispute about fault and the claim is still being investigated.

Is Collision Coverage Required by Law?

You are not legally required to carry collision coverage. States only require liability insurance to protect others from damage you cause.

However, financed vehicles almost always must carry collision (and comprehensive) coverage because the lender still has a financial interest in the car.

Once your loan is paid off and you own the vehicle outright, you can legally drop collision. But that doesn’t automatically mean you should.

Deciding Whether to Drop Collision Coverage

Collision becomes optional when you’re no longer under a lender’s requirements. Whether you should drop it depends on your car’s value, your finances, and your appetite for risk. Even a ten-year-old car can be expensive to repair.

Before you remove collision, consider the following:

Your Car’s Value

Collision only pays up to your car’s actual cash value (ACV), minus your deductible. If your annual collision premiums are high relative to what your car is worth, coverage may no longer be cost-effective.

To evaluate:

Check your car’s market value using tools like Edmunds or Kelley Blue Book (use trade-in/market value, not the original purchase price).
Compare that value to what you pay per year for collision coverage (not your total premium).

If your car is worth $2,500 and you’re paying $400 per year for collision with a $500 deductible, the math may not be in your favor.

Your Ability to Save and Self-Insure

A common suggestion is to drop collision and “bank” the savings in a dedicated account as a self-insurance fund. In theory, that’s smart—but only if you’ll actually do it.

If you know you’re unlikely to consistently save the difference, ask yourself realistically:

Could I afford to repair or replace this vehicle out of pocket if it were totaled tomorrow?
Could I live without this car for a while if I had to?

If the answer is “no,” keeping collision may still be the better choice—even on an older car.

Your Mileage and Risk Exposure

On average, drivers experience one accident roughly every 165,000 miles. If you:

Drive a lot, especially in heavy traffic or urban areas
Have a long commute or frequently park on busy streets

…your risk of a collision may be higher. In that case, keeping collision might make sense even on an older vehicle—especially if it’s still worth several thousand dollars and you can’t easily replace it.

FAQs on Dropping Coverage

When is it a good idea to drop collision coverage on an older car?

It’s usually worth considering when your car’s actual cash value is low and your annual collision premium (plus deductible) approaches or exceeds what the car is worth. If totaling the car wouldn’t hurt you financially, dropping collision can make sense.

Is it legal to drop collision coverage?

Yes. Collision coverage is not required by law. Only liability coverage is legally required in most states. However, if your car is financed or leased, your lender may require collision coverage until the loan is paid off.

How do I know what my car is worth before dropping collision?

Check your car’s market value using tools like Kelley Blue Book or Edmunds, and use the trade-in or market value figure—not what you originally paid. Then compare that value to what you pay for collision each year and your deductible.

What happens if I get into an accident after dropping collision coverage?

If you’re at fault or the at-fault driver can’t be found or doesn’t have adequate coverage, your insurer will not pay to repair or replace your vehicle. You’ll be responsible for those costs out of pocket.

Should I keep comprehensive coverage if I drop collision?

Often yes. Comprehensive coverage is relatively inexpensive and protects against theft, vandalism, weather damage, and other non-collision losses. Many drivers drop collision on older cars but keep comprehensive coverage.

What if I’m bad at saving money—should I still drop collision?

If you know you won’t consistently save the money you’re no longer paying for collision, and you can’t afford to replace your car on your own, keeping collision coverage might be the safer choice, even if the car is older.

Does dropping collision coverage affect my liability insurance?

No. Dropping collision only affects coverage for damage to your own car. You must still carry at least your state’s minimum liability insurance, and it’s often wise to carry more than the minimum.

Final Word – When Should You Drop Collision Coverage on Your Car?

There’s no one-size-fits-all rule for when to drop collision on an older vehicle. The right decision depends on:

What your car is currently worth
How much you pay annually for collision (and your deductible)
How much you drive and where
Your ability to pay for repairs or replacement out of pocket

If your car were totaled today, collision coverage would pay up to its market value, minus your deductible. If you could comfortably cover that amount yourself, you may be better off dropping collision and redirecting the savings.

If the loss of your vehicle would create a major financial hardship—because you couldn’t replace it or afford repairs—then keeping collision coverage a bit longer might be the safer choice, even on an older car.