Auto Coverage Right-Size Calculator
Example: Current vehicle market value: 12000 $ · Vehicle age (years): 6 · Remaining auto loan balance (0 if paid off): 0 $ · Collision deductible: 500 $ · Comprehensive deductible: 500 $ · Annual collision premium: 600 $ · Annual comprehensive premium: 200 $
| Vehicle value threshold to keep coverage | $18,000 |
| Years until you should drop collision | 0 |
| Annual premium waste if car is already below threshold | $800 |
| Potential savings over remaining useful life | $7,200 |
Worked example
A 6-year-old car worth $12,000 with $600 collision + $200 comprehensive = $800 premiums and $1,000 in deductibles. The 10× rule says keep collision as long as vehicle value exceeds $8,000. At 15% annual depreciation, the car falls below that threshold in about 3 years, when it is worth $7,650. Dropping coverage then saves $800/year for the remaining useful life.
Frequently asked questions
What is the 10-times rule for dropping collision?
The commonly cited rule: if 10 times your annual collision premium plus deductible exceeds your vehicle's market value, dropping coverage is rational. At that point, you could pay every deductible for 10 years and still come out ahead on premiums alone.
Can I drop coverage if I still have a car loan?
No. Lenders require collision and comprehensive coverage on financed vehicles as a condition of the loan. You must maintain coverage until the loan is fully paid off, regardless of the vehicle's age or value.
What does comprehensive insurance cover that collision does not?
Comprehensive covers non-collision events: theft, fire, hail, flooding, falling objects, and animal strikes. If you live in an area with high theft, severe weather, or large animal populations (deer strikes), comprehensive may be worth keeping even after dropping collision.
Where do I find my car's current market value?
Kelley Blue Book (kbb.com), Edmunds (edmunds.com), and NADA Guides (nadaguides.com) all provide free market value estimates. Use the private party sale value for insurance decisions, not trade-in value.