When to drop full coverage?

[JaCC]

We've got a 1997 Chev and a 2000 Olds Intrigue. Both have been paid off for at least 1 year. We don't plan on buying another until they quit working. Full coverage on 97 Chev is $513.32/year. Liability only is $340.50/year. Olds is $655.72/year for full, $322/year for liability only. How do I determine whether or not to cancel the full coverage?

 

Thanks.

Sorry if this topic has been discussed extensively before.

Edited April 14, 2006 by JaCC

[lakpr]

My thumb rule is to drop the comprehensive coverage when the difference in annual premiums is worth more than 10% of the value of the car.

 

In your case, the difference in premiums is $173 for the Chevy and $333 for Olds. Unless your Chevy is worth more than $1700 in its current condition, and the Olds more than $3300 in its current condition, you are paying too much for the comprehensive coverage.

 

I had earlier financed a car at 2.9% APR for 4 years, however, paid it off at the end of only 2 years since I am required to maintain comprehensive coverage while the loan has still a balance, and the difference between comprehensive and liability-only is more than $500 per year for me ( I live in NJ ) Additional financial considerations like that might also influence your decision.