When should you drop full coverage on an older car?

My car is a 2012 with about 180,000 miles on it, and it's paid off. I'd say it's worth maybe $5,000. I'm currently paying for full coverage, but wondering if it even makes sense at this point. And if something does happen, is it even worth filing a claim on a car like this? Should I drop down to liability only or keep full coverage?

It's not necessarily when, but if you should drop your coverage. I usually suggest keeping as much coverage as you can comfortably afford, but it really depends on your situation. When deciding whether full coverage still makes sense on an older, paid-off car, there are a few rules of thumb worth considering:

1. If your car is worth less than $4,000, the payout after your deductible may not justify the premiums you're paying.
2. If your car is worth less than 10 times your annual full coverage cost, it may not pencil out. This one does involve some math, because cars can vary a lot in value, and it isn't strictly based on age.
3. If you could replace or repair the car without too much financial stress, you may not need the coverage safety net at all.

That said, dropping to liability only means you'd be on your own if the car is stolen, totaled in an at-fault accident, or damaged by hail or a fallen tree (scenarios that are all too common and only covered by comprehensive insurance). If your finances aren't quite there yet, keeping full coverage might still make sense for the peace of mind alone.

As for whether to file a claim if something does happen: your deductible is a big factor. If your deductible is $1,000 or more on a $5,000 car, the potential payout is already pretty limited. It's also worth knowing that filing a claim can raise your rates, so if the damage is close to or less than your deductible, paying out of pocket is usually the better move.

If you're on the fence, get a quick estimate on the value of your car through Kelley Blue Book or Edmunds to give you an idea of what its worth. Then shop around for rates, too. If it's been a while since you got insurance quotes, you could be paying more than you need to. Finding a better deal might make it worth keeping full coverage. Don't forget you can reach out to your insurance agent (or one of our licensed agents, if you don't already have someone!) and ask questions. They can walk you through what dropping certain coverages would save you each month.