What Kind of Insurance Should I Have on My 10-Year-Old Car?

With vehicles retaining more of their value as they get older, it makes sense to consider what types of insurance you should carry on your vintage automobiles. Your own personal financial situation and the value of the vehicle are important variables to consider when making this decision. Automatically dropping full coverage when your vehicle hits a certain age may not the right decision for you.

Liability insurance covers damage that you cause to property that belongs to others in case of an accident. In most states, a certain amount of liability insurance is required by law. Liability is often sold with three different limits. The first amount is how much the policy will pay for the medical bills and other expenses of each injured person. The second is the maximum total coverage for all of the injured in the accident, and the third number is the limit for property damage. You should purchase liability insurance at least equal to the amount of assets you own regardless of the age of your vehicle.

Collision coverage will pay for repairs to your vehicle in case of an accident that is your fault. Collision insurance is questionable on an older vehicle, because the most it will pay is the retail value of your vehicle, less any deductible. The coverage amount decreases on an older vehicle with a lower retail value. A bank requires this coverage if you still owe money on your vehicle. If you own the car, a rule of thumb is that if you pay more than 10 percent of the retail value each year in premiums for collision coverage, you may want to drop it.

Comprehensive insurance is also called "other than collision damage" insurance, and it covers most other types of vehicle damage including fire and theft, as well as any broken glass. Like collision coverage, it will not pay more than the retail value of the vehicle. If your vehicle is worth $5,000, and you have a deductible of $1,000, you would receive a maximum of $4,000 if your vehicle were totaled in an accident. If your annual premium is more than $400, or 10 percent of the maximum benefit, you may want to decline the coverage.

Towing coverage is available on many insurance policies. This insurance covers towing your vehicle to a repair facility if it should break down. The coverage can make sense on an older vehicle, particularly if you don't have any type of roadside assistance program through another organization. Rental car coverage pays for a rental vehicle for you to use while the body shop repairs your vehicle.