Car Insurance for a Paid Off Vehicle
- If your vehicle is fully paid off, you can drop full coverage to lower rates but out-of-pocket costs will be higher.
- Use The Zebra to get car insurance for your paid off vehicles from GEICO, Progressive, Nationwide, Liberty Mutual and Allstate (+100 other companies)
Auto insurance for an owned vehicle
Paying off your vehicle is a big deal— not only have you eliminated a car payment, but you may be able to save on auto insurance. When you have a financed vehicle, you're often beholden to a financial institute that requires full coverage insurance on that car. Once you own that vehicle outright, you have some freedom when it comes to insurance that can save you money. Let’s explore.
Your car is paid off— how much insurance do you need?
Now that your vehicle is yours alone, you can decide how much insurance coverage you want to carry. Comprehensive and collision insurance comprise "full coverage" and are among the most expensive coverages you can carry. Banks and lienholders will require this coverage on a loaned or leased vehicle, but you now have the choice to remove it. We understand that the options can be overwhelming, but we're here to help.
If you’re uncertain and looking for ways to cut insurance costs, you could consider if the value of your owned vehicle is worth the premium it costs to insure it. Here’s how to tell:
- Determine the value of your vehicle through NADA or Kelley Blue Book
- Speak with your insurance company and ask them how much additional premium it costs to have comprehensive and collision coverage on your vehicle.
- If the value of the vehicle is less than the premium determined in step 2, you could feasibly remove this coverage.
If your vehicle is still relatively new, you’ll probably want to keep full coverage. In the event you want to buy a newer vehicle and start this loan/purchasing process over again, the sale of your original car could be used to make a down payment. So, you’ll want to maintain physical protection (your collision and comprehensive coverage) to protect it — these coverages are recommended as long your vehicle retains a worth of at least $4,000.
When should you drop full coverage on your car?
We get it— after your car is paid off, you may want to switch to liability-only coverage in order to save on premiums. This is generally okay if your car is older and worth less than $4,000. If this isn't your scenario, we recommend against dropping comprehensive and collision. Instead, try raising your deductibles: A higher deductible means lower insurance rates but a larger out-of-pocket sum if an accident occurs.
Updating data...
| Company | Full coverage w/$500 deductible | Full coverage w/$1000 deductible | Minimum coverage |
|---|---|---|---|
| Allstate | $1,206 | $1,059 | $365 |
| Progressive | $943 | $834 | $346 |
| Farmers | $893 | $808 | $359 |
| State Farm | $785 | $728 | $291 |
| GEICO | $771 | $674 | $226 |
| Nationwide | $738 | $671 | $301 |
| USAA | $683 | $594 | $217 |
Source: The Zebra
The Zebra’s Dynamic Insurance Rating Tool data methodology
The Zebra’s Dynamic Insurance Rating Tool for home and auto insurance rates utilizes the latest ZIP code-level rate filings from across the U.S., sourced from Quadrant Information Services and S&P Global. These filings, typically updated annually or biennially by insurers, are verified through Quadrant’s QA process and then integrated into The Zebra’s estimator.
The displayed rates are based on a dynamic home and auto profile designed to reflect the content of the page. This profile is tailored to match specific factors such as age, location, and coverage level, which are adjusted based on the page content to show how these variables can impact premiums.
For a comprehensive understanding, see our detailed methodology.
"I often explain it like this: if you're driving an expensive vehicle, chances are it didn't cost less than $25,000. Now, think about the cost of other cars on the road. If you’re at fault in an accident, especially a multi-car one, that minimum coverage won't be nearly enough to cover the damages."
Katie Gold — Head of Agency at The Zebra
How to save on auto insurance
In addition to considering if your additional coverage is necessary, we have some other savings options to consider for you and your owned vehicle. Let’s get to it.
Keeping all of your insurance policies under one company can lower your auto insurance premium. Most larger insurance carriers have renters, home, condo, and umbrella policies available to purchase and bundle with your auto policy.
Updating data...
| Company | No discount | With bundling discount |
|---|---|---|
| Allstate | $826 | $636 |
| Farmers | $984 | $768 |
| Nationwide | $675 | $588 |
| State Farm | $766 | $519 |
| Travelers | $1,487 | $1,321 |
| USAA | $767 | $702 |
Source: The Zebra
Telematics are in-car devices that, after about six months of monitoring, create a profile based on your driving habits. So, if you drive cautiously, you could see some savings. While this program isn’t available in every state — it's still a growing feature of the insurance industry — here are some estimates from top insurance companies.
| Company | Estimated Savings |
|---|---|
| Progressive's SnapShot | Average of $130 |
| Allstate's Drivewise | Average of 10-25% |
| State Farm's Drive Safe & Save | Up to 15% |
| Nationwide's SmartRide | Up to 40% |
| Liberty Mutual's RightTrack | Average of 5-30% |
| GEICO's DriveEasy | Varies |
Your insurance rate changes any time you get a quote. So, if you move, have a birthday, or, like in this situation, pay your car off, you should look around to see if you could get a better offer elsewhere. Do that here with us by entering your zip code below.
Compare quotes for your paid off vehicle from 100+ companies
Meet our trusted insurance agents
Have more questions about car insurance for a paid off vehicle? Give our knowledgable agents a call at 1-888-419-3176
