If you drive a clunker, you’ve probably had people tell you that you could save a huge chunk of cash by dropping everything but liability insurance. The savings you could rack up are self-evident—to get an idea of exactly how much you could save, compare vehicle insurance premiums online sometime. But is relying solely on liability insurance such a smart idea?
Not a lot of people like to imagine life without collision or comprehensive insurance. If you carry both, you’re essentially covering yourself for any damage that occurs to your vehicle in an accident, or if your car falls victim to other hazards outside of the realm of a collision—like if someone steals your car, guts it, and leaves it for dead in a ditch somewhere.
The thing is, if you’re driving a heap that’s only worth a few hundred bucks, you could be throwing money away by paying for collision and comprehensive—both of which, combined, account for about half of your entire car insurance monthly payment.
Ultimately, the decision depends entirely upon your circumstance. If you’re upside down in your car, it’s never a good idea to expose yourself to financial ruin by not insuring it adequately. However, if the car is paid off and isn’t worth insuring, you could save a significant amount of money every month by scaling back to the bare minimum that law requires you to have, like liability, which will pay for any damages you cause to other vehicles.