If you’ve noticed your car insurance creeping up lately, you’re not alone. Between rising car prices and more expensive repairs (thanks, high-tech bumpers), premiums have been steadily climbing. According to the Bureau of Labor Statistics, insurance costs were up over 11% at the end of last year—and in some places, they’ve jumped by as much as 50%. So yeah, if your wallet’s feeling the heat, it’s totally understandable.
Naturally, a lot of drivers are looking for ways to bring those costs down. One option people are exploring? Dropping parts of their coverage—especially if they’ve already paid off their vehicle. But is that actually a smart move?
Let’s break it down.
Do You Need Full Coverage?
If your car is financed or leased, full coverage isn’t optional—your lender likely requires it. That typically includes liability, collision, and comprehensive insurance.
But if you own your car outright? You’ve got more flexibility. You could technically scale back to liability-only insurance, which is all most provinces and states require anyway. Liability covers damage or injuries you cause to other people or their property. It’s the legal bare minimum.
Still, a lot of people keep full coverage for peace of mind. And honestly, that’s fair. Full coverage means that if your car gets totaled in a crash or stolen, your insurance will likely help foot the bill (minus your deductible, of course). For newer cars or even just ones that would cost a lot to fix, that extra protection can be a lifesaver.
As one insurance agent put it: modern cars are packed with tech, which makes them super expensive to repair. So even careful drivers may want to play it safe.
But Full Coverage Isn’t Always Worth It
Here’s the catch—full coverage isn’t cheap. It can cost two or even three times more than a basic liability policy. And if your car isn’t worth much anymore, you might be paying more in premiums than your vehicle’s actually worth.
For example, if your car is valued at $3,000 and your deductible is $1,000, your max payout after a crash would be $2,000. If you’re paying close to that amount every year in insurance, you’re not exactly coming out ahead.
A common rule of thumb? Once your car hits around the 10-year mark, it might be time to reconsider those extra coverages. But really, it all depends on your comfort level and financial situation. If a surprise $3,000 expense would wreck your budget, full coverage could still be worth the cost just for peace of mind.
Other Ways to Save on Car Insurance
If dropping coverage isn’t right for you, don’t worry—there are still other ways to bring your bill down. You could raise your deductible (just make sure you’d be able to cover it if something happened), improve your credit score, or take advantage of discounts from your insurer, like bundling with home insurance or using a telematics app that tracks safe driving.
Shopping around is also key. Different insurance companies can offer wildly different rates for the exact same coverage. It takes a bit of effort, but comparing a few quotes could save you hundreds.
The Basics: What Coverage Do You Actually Need?
Everyone needs at least basic liability insurance—that’s non-negotiable. It protects other drivers if you’re at fault in an accident. Depending on where you live, you might also need accident benefits (to cover injuries) and protection against uninsured drivers.
Extras like collision (covers damage to your own car in a crash) and comprehensive (covers non-crash stuff like theft or weather damage) are optional. But if you’re driving a newer car, or just don’t want to stress about what-ifs, those add-ons can be worth every penny.
A Few Common Questions
Yes, you absolutely need insurance to drive any car—your own, a rental, or even a UHAUL. Rental companies often offer coverage, but your credit card might already include it, so it’s worth checking before you shell out extra.
Temporary insurance is a thing too. So if you only need coverage for a few days or weeks—maybe for a borrowed car or a test drive—you can buy short-term insurance for that.
Buying Insurance: What You’ll Need
Getting insurance is pretty straightforward, especially online. You’ll need your driver’s license, info about your current policy (if you have one), your driving and claims history, and the basics about your vehicle—make, model, year, etc. It helps to have your VIN handy too.
When it’s time to renew, your insurer usually sends you a heads-up 30 to 60 days in advance. That’s your chance to review your policy, make changes, or shop around before locking in for another term.
The Truth Behind a Few Insurance Myths
Think insurers are swimming in profits? Not exactly. Most only make around an 8–9% profit margin. A huge chunk of what they collect goes straight to covering claims.
Also, inflating a claim to “get a little extra” is actually insurance fraud. It might seem harmless, but it’s illegal and raises costs for everyone.
And while major natural disasters can impact premiums, those increases usually stay local. So if there’s a flood across the country, your home insurance might not budge—unless your area is also at risk.
Final Thoughts
Car insurance can feel like a pain, but it’s there to protect you—and it’s legally required, so you might as well make sure you’re getting the best deal. Take a few minutes to understand your coverage, ditch what you don’t need, and explore your options. Whether you’re team full coverage or riding with the basics, what matters most is that your policy works for you.
And hey, saving a bit of money in the process? That’s just the cherry on top.
