This was the lowest rate of depreciation compared to the Toyota Corolla, Chevrolet Malibu and Ford Fusion, which were likely to lose 34% of their value year over year, on average. Our analysis revealed that the Honda Civic depreciated in value at a rate of 29% per five years, on average. In return for less protection, the rates for a minimum coverage policy are much cheaper than those for full coverage. Under a minimum coverage policy, a driver's insurance would only pay for damage they caused to another person. We discovered that insuring a 25-year-old Ford Fusion could cost 100% of the car's value before any claims were made on the policy.Īs an alternative to purchasing a new vehicle, drivers (especially those without a history of accidents or citations) may find it to be a better investment to switch to a minimum coverage policy - one that offers only liability coverage. In fact, depending on the make and model of the car, the size of one's insurance premium varies. For major brands, vehicles that are between 20 and 25 years old could see insurance prices that equal more than three-fourths of their vehicle's value.įor instance, the cost of insurance on a 15-year-old car totals 46% of thea car's value, while the driver of a 20-year-old car could pay rates that add up to 60% of their vehicle's value. While we don't expect that the cost of insuring a car will eclipse the value of the vehicle until it's more than 25 years old, the premiums one pays take up a larger proportion of the vehicle's value as time goes on. The cost of insuring a 5-year-old car equates to 27% of the car's value.Īfter 10 years, the annual cost of car insurance represents 35% of a typical car's value. It's financially smart to keep car insurance that includes comprehensive and collision coverages on vehicles that are younger than a decade.
Benefits of switching to minimum coverage insurance
After 25 years, ValuePenguin estimates that the cost of full coverage insurance would be 188% of the car's value. After two decades, the cost of full coverage car insurance would equal 141% of a vehicle's value. A driver would pay higher premiums for full coverage only to be unable to use their insurance to fully cover the cost to replace their car if it were totaled. The cost of insuring a 15-year-old car after an accident represents 105% of the car's value, on average.Īs one's car ages, it becomes increasingly difficult to justify paying for full coverage. While the cost of full coverage by itself likely won't be more than what a car is worth, the cost of insurance is more likely to be higher than the value of the car after an accident. For some drivers, it may be more economical to pay for a newer car out of pocket than it would be to commit to higher future insurance premiums after an accident.īetween 10 and 15 years after a vehicle's model year, full coverage is a poor investment.
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