Reading the Numbers

Look at the declarations page of your auto policy — the summary sheet usually near the front — and find the line labeled “Bodily Injury Liability” or sometimes “Liability Limits.” Next to it you’ll typically see three numbers separated by slashes, something like 100/300/50. These aren’t random codes. Each number is a separate dollar cap, expressed in thousands, that limits how much your insurer will pay out for a specific category of damage if you’re found at fault in an accident. Understanding what each slot represents is one of the most useful five minutes you can spend with your policy, because it tells you exactly where your financial exposure begins if a claim exceeds what your insurer will cover.

Reading the three numbers on your policy

The format is standardized across almost every insurer and every state, which makes it easy to compare once you know the pattern: first number / second number / third number, each one representing thousands of dollars.

The first two numbers apply to bodily injury liability — the money your insurer pays on your behalf for injuries to other people in an accident you caused. The first number is the cap per injured person. The second number is the cap for the entire accident, no matter how many people were hurt. The third number is a completely separate coverage, property damage liability, which pays for damage to someone else’s car, fence, mailbox, or storefront — not people, just property.

So a policy showing 100/300/50 means: up to a certain amount per injured person, up to a higher combined amount for everyone injured in that one accident, and a separate amount for property damage. These three limits don’t share a pool of money with each other. Running low on the property damage limit doesn’t let you borrow room from the bodily injury limits, and vice versa. They’re three distinct buckets, each with its own ceiling.

Some policies simplify this into a single “combined single limit,” where one number covers both injury and property damage for the whole accident without splitting it into per-person and per-accident caps. If your declarations page shows only one number on the liability line instead of three, that’s likely what you have, and the logic below still applies conceptually — it’s just not divided into separate compartments.

Where to find your actual numbers

Your specific limits are printed on your policy’s declarations page, and they’re also usually visible through your insurer’s online account or app under “coverages” or “policy details.” If you’ve never checked, it’s worth doing now rather than after an accident. The limits you’re required to carry can vary by state, and the amount that feels adequate depends on factors like your assets, your typical driving environment, and how much traffic and how many expensive vehicles are common where you drive — none of which a generic article can size for you. Your insurance agent or your state’s department of insurance website can tell you what’s currently required where you live and what optional higher limits are available.

What the first number covers

The first number is the per-person bodily injury limit. It caps how much your insurer will pay for the injuries of any single individual hurt in an accident you’re responsible for. That includes people in other vehicles, pedestrians, cyclists, and passengers in your own car (subject to how your policy defines it) — but it does not include your own injuries, which are handled by different coverages like medical payments or personal injury protection, not by your liability limits.

What counts toward this per-person cap can include the other person’s medical bills, rehabilitation costs, lost income while they recover, and in some cases compensation tied to pain and suffering. All of that gets totaled up for each individual person, and your insurer pays up to the per-person limit for that one person’s claim. If the costs tied to that individual’s injury exceed the limit, the excess isn’t covered by this part of your policy at all.

It matters to think about this number in isolation from the others because injury costs — especially involving hospitalization, surgery, or long recovery periods — can escalate well past what a lot of drivers assume is “plenty.” A single serious injury claim can consume a per-person limit that once seemed generous, particularly if the limit was set years ago and hasn’t been revisited since.

What the second number covers

The second number is the per-accident bodily injury limit — the total ceiling across everyone injured in that one accident combined. This is the number that starts to matter most when more than one person is hurt: multiple occupants of another car, a driver plus a passenger, a group of pedestrians, and so on.

Here’s the mechanic worth understanding: no single injured person can receive more than the first number (the per-person cap), even if the second number is much larger and there’s technically room left in the overall accident total. The per-accident limit is a ceiling on the sum of all the individual payouts, not a way to funnel extra money to one especially costly claim. So with a 100/300 split, one injured person can be paid up to 100, but if four people are injured in the same accident, the combined payout across all four still can’t exceed 300, and no one of them individually can exceed 100 regardless of how the math divides up.

This is where the difference between a low-injury and a multi-injury accident becomes financially significant. A single-car accident with one other injured driver might stay comfortably under both numbers. A multi-vehicle pileup with several injured occupants can approach or exceed the per-accident total surprisingly fast, even when no individual injury alone would have exceeded the per-person limit.

Why insurers split it this way

Splitting the bodily injury limit into a per-person and a per-accident number lets insurers price risk more precisely and lets policyholders understand two different exposures at once: how bad can one person’s claim get, and how bad can the whole accident get if several people are hurt. Thinking of it as one undivided lump sum would obscure the fact that a bad multi-injury accident behaves very differently, financially, than a bad single-injury one.

What the third number covers

The third number is property damage liability, and it’s a separate coverage from the first two entirely — it doesn’t share a limit with bodily injury at all. This is the amount your insurer will pay, per accident, for damage you caused to someone else’s property. Most often that means the other driver’s vehicle, but it can also include things like a fence, a garage door, a utility pole, a storefront window, or anything else your car damages in the course of the accident.

Because it’s a single per-accident number rather than split into per-item and per-accident like the bodily injury side, all the property damage from one accident — however many vehicles or objects were involved — draws from this one limit. If you cause a chain-reaction crash involving several vehicles, the combined repair or replacement costs for all of them come out of this single third number, not from three separate pools.

Property damage costs can climb quickly in ways that are easy to underestimate. Modern vehicles, even ordinary sedans, often cost more to repair than older intuition suggests, thanks to sensors, cameras, and structural components built into bumpers and panels that used to be simple sheet metal. A relatively routine-looking fender bender involving a newer vehicle can produce a repair estimate that eats a meaningful chunk of a property damage limit that might have felt generous for an older-model accident a decade ago.

What happens if the damage exceeds the third number

If the total property damage from an accident is higher than your property damage liability limit, the difference isn’t automatically absorbed by your insurer or by the bodily injury portion of your coverage — it’s a separate exposure that sits outside those three numbers. This is one of the main reasons drivers choose to carry higher liability limits than the ones required in their state, or to add an umbrella policy on top of their auto coverage: not because anything is wrong with the minimum structure, but because the gap between a low limit and a real-world repair or medical bill can be wider than expected.

Putting the three numbers together

It helps to picture your liability limits as three separate accounts rather than one lump of money. The per-person bodily injury number caps what one injured individual can draw. The per-accident bodily injury number caps the combined total across everyone injured in that one event. The property damage number is its own account entirely, covering the physical damage to other people’s belongings and structures, with no crossover between it and the injury side.

When you’re reviewing your policy, it’s worth asking, for each of the three numbers, whether it feels adequate given how you actually drive: how much traffic you’re regularly in, what kind of vehicles are common on your routes, and what you’d want covered if an accident involved more than one injured person or more than one damaged vehicle. There’s no universal right answer to what these numbers should be — it depends on your circumstances and on the specific requirements in your state, which your insurer or your state insurance department can confirm. But knowing what each of the three numbers actually caps, and that they don’t share resources with each other, makes the declarations page a lot less cryptic the next time you look at it.

Look at the liability section of your policy declarations page and you’ll likely see three numbers separated by slashes, something like 100/300/50. Most drivers glance past this notation without ever learning what each figure controls. The first two numbers are your bodily injury liability limits, and they’re split into per-person and per-accident amounts. Understanding that split matters because it determines exactly how much your insurer will pay out when someone else is hurt in a crash you caused, and it can leave a real gap between what a court or settlement says you owe and what your policy actually covers.

What Per-Person Means

The per-person limit is the maximum amount your insurer will pay for injuries to any single individual in an accident you’re responsible for. If your declarations page shows 100/300/50, the “100” represents your per-person limit, typically expressed in thousands of dollars. That means your insurer will pay up to that amount for one person’s medical bills, lost wages, and other injury-related damages, no matter how severe the injury or how high the actual costs run.

This limit applies individually to each person injured in the accident. If you cause a crash and injure a single passenger in the other vehicle, your per-person limit is the ceiling on what your insurer pays for that person’s claim, full stop. It doesn’t matter whether other people were also in the car unhurt, or whether your per-accident limit is much higher. The per-person number is a hard cap for each individual claimant.

It’s worth noting that this limit covers bodily injury liability specifically, meaning injuries to other people. It has nothing to do with damage to vehicles or property, which falls under a separate liability category with its own limit. It also has nothing to do with your own injuries if you’re at fault, which would fall under different coverage entirely, such as medical payments or personal injury protection, depending on your state and your policy.

What Per-Accident Means

The per-accident limit, the second number in that slash notation, is the total ceiling your insurer will pay for all injury claims combined arising from a single accident. Using the same example of 100/300/50, the “300” is the per-accident limit. That means no matter how many people were injured, and no matter how large each individual claim is, your insurer will not pay more than that combined total for bodily injury liability from that one event.

This is where the two numbers start to interact in a way that catches people off guard. The per-accident limit is not simply the per-person limit multiplied by however many people were hurt. It’s an independent cap. In the 100/300 example, you could have three people injured, each with a claim that would justify the full $100,000 per-person limit, but the total payout across all three is still capped at $300,000. The insurer doesn’t write three checks for $100,000 each just because the per-person limit allows it. The per-accident number governs the total.

Because of this, the per-accident limit is always equal to or greater than the per-person limit, and often it’s set at roughly two to three times the per-person figure on standard policies, though the exact ratio varies by insurer and by the specific limits a driver selects. If you’re unsure what ratio applies to your own coverage, your declarations page will show both numbers directly, and your agent or insurer’s customer service line can walk through what they mean for your specific policy.

Why the Split Exists

The two-tier structure might seem like unnecessary complexity, but it exists to balance two competing goals: giving meaningful protection to any one injured person, while keeping a predictable outer boundary on what an insurer might owe from a single event.

Without a per-person cap, a single catastrophic injury claim could theoretically consume an entire per-accident limit, leaving nothing for anyone else hurt in the same crash. The per-person limit guarantees, in effect, that no one person’s claim can be reduced simply because other people were also injured in the same accident and are also seeking payment. Each person’s claim is evaluated up to the per-person ceiling independently.

Without a per-accident cap, on the other hand, an insurer’s exposure in a multi-victim accident could balloon far beyond what the per-person limit alone would suggest, especially in accidents involving several vehicles or a bus, van, or rideshare full of passengers. The per-accident limit puts a boundary on total exposure, which is part of how insurers price policies and manage risk across their entire book of business. It’s also part of why raising your per-person limit alone, without a corresponding increase in your per-accident limit, would provide limited practical benefit in a multi-person accident. The two figures are designed to move together.

This split isn’t unique to auto insurance. You’ll find the same per-person/per-occurrence structure in general liability policies for businesses, homeowners liability coverage, and umbrella policies. It’s a standard architecture across liability insurance generally, because the underlying problem, protecting individuals while capping aggregate exposure, is the same regardless of what kind of policy you’re looking at.

What Happens When a Claim Involves More Than One Person

This is where the split actually plays out, and it’s worth walking through carefully because it’s the scenario most drivers never think about until they’re in it.

Suppose you’re at fault in an accident where three people in the other vehicle are injured: the driver and two passengers. Each of them will have their own claim for medical costs, lost income, and other injury-related damages. Your insurer evaluates each person’s claim individually, up to your per-person limit, but the combined payout across all three claims cannot exceed your per-accident limit.

Here’s a simplified illustration using round numbers, not any specific real-world figures: if your limits are 50/100, and one injured person’s claim is valued at $60,000, your insurer will only pay up to $50,000 for that person, because that’s the per-person ceiling, regardless of the per-accident number being higher. If a second person in the same accident has a claim valued at $40,000, and a third has a claim valued at $30,000, the combined total of what would otherwise be owed is $120,000 across the three people. But your per-accident limit is $100,000, so the total actually paid out is capped there, even though the per-person limit ($50,000) was never exceeded by any single claim.

How that capped total gets divided among the three injured people isn’t something the per-person and per-accident numbers alone answer. That allocation process, when total claims threaten to exceed the per-accident limit, involves the insurer, sometimes legal representation for the claimants, and potentially a court, depending on how the claims are being resolved. The numbers on your declarations page set the outer boundaries of what your insurer will pay; they don’t determine the internal math of how multiple claimants split a limited pool.

This also raises the practical possibility that when a serious multi-person accident happens, the people you injured may end up with unpaid portions of their claims that exceed what your liability coverage was able to cover. This is precisely why underinsured motorist coverage exists on the other side of the transaction, so that if you’re the one injured by someone whose limits run out before your claim is satisfied, you may have another source of recovery to look into, separate from the at-fault driver’s insurer. That’s a topic worth reading about on its own, since it functions differently from the liability side.

A Few Things Worth Checking on Your Own Policy

Because the per-person and per-accident distinction only matters in the specific event of a multi-person injury claim, it’s easy to go years without ever thinking about it. A few habits make the split less abstract:

• Find your declarations page and locate the actual numbers for your bodily injury liability line. They’ll be listed in that slash format, and confirming what they are takes less time than most people expect.
• Notice the ratio between your per-person and per-accident limits. If you regularly drive with multiple passengers, carpool, or use your vehicle for rideshare or delivery work, a higher per-accident limit relative to per-person may be worth discussing with your agent, since more people in your vehicle at any given time increases the odds that a single accident involves multiple injured claimants.
• Remember that these two numbers govern bodily injury only. Property damage liability, which covers the other driver’s vehicle or other property, is a separate figure entirely, usually the third number in the slash notation, and it doesn’t split into per-person and per-accident because property damage claims aren’t tied to individual people in the same way injury claims are.
• If you want to know exactly how your insurer defines “accident” for purposes of the per-accident limit, or how it would handle a specific multi-vehicle scenario, your policy’s full text or a call to your insurer will have the precise language, since definitions can carry more nuance than the shorthand numbers on the declarations page suggest.

The per-person/per-accident split isn’t a trick or a loophole; it’s simply how liability coverage is structured to handle the reality that accidents can hurt more than one person at a time. Knowing which number does what means you’ll never be surprised by the shape of your own coverage, even if you never need to use it.

Somewhere on your policy declarations page there’s a number next to “comprehensive” and another next to “collision” — maybe $500, maybe $1,000, maybe something else entirely. That number is your deductible, and most drivers glance at it once, register that it’s “the amount I pay before insurance kicks in,” and never think about it again until they’re standing in a body shop parking lot wondering why the estimate and the check don’t match. The deductible deserves more attention than that, because it isn’t really a fee. It’s a standing decision about how much of your own risk you’re willing to hold before you hand the rest to your insurer.

What a deductible actually decides

A deductible is the slice of a covered loss that you pay yourself before your insurance policy pays the rest. If your car needs $3,000 in repairs after a collision and your collision deductible is $1,000, you pay the first $1,000 and your insurer covers the remaining $2,000, up to your policy’s limits. If the repair costs less than your deductible — say $600 in damage against a $1,000 deductible — your insurer typically pays nothing at all, because the loss never crosses the threshold you agreed to absorb.

Deductibles generally apply to the coverages that pay for damage to your own vehicle: collision coverage, which handles crashes and impacts regardless of fault, and comprehensive coverage, which handles things like theft, vandalism, weather, and animal strikes. Liability coverage, which pays for damage or injury you cause to other people, usually doesn’t carry a deductible at all — the whole point of liability coverage is that it pays out on someone else’s behalf, not yours, so there’s nothing for you to absorb first. This is worth knowing because it means the deductible decision only really touches part of your policy, even though it’s often the part people think about most.

The deductible also isn’t a single fixed number across your whole policy in most cases. Comprehensive and collision deductibles are usually set separately, and you can often choose different amounts for each. A driver might reasonably decide that hail damage (comprehensive) is a lower personal priority than crash damage (collision) and set the two deductibles at different levels. Check your declarations page — the document that lists your specific coverages, limits, and deductibles — to see exactly how yours is structured, because policies vary and the labels aren’t always self-explanatory.

How a higher deductible changes your exposure

Choosing a higher deductible means you’re agreeing to carry more of the financial weight yourself before insurance activates. This has a few concrete effects that are easy to underestimate until you’re living through a claim.

First, it changes what counts as “worth filing.” If your deductible is $1,000 and you get a $900 repair estimate, filing a claim gets you nothing — you’d pay the full $900 out of pocket either way, since it doesn’t clear your deductible. Even a $1,200 estimate, which technically qualifies, might not be worth reporting once you weigh it against the possibility of a premium increase at renewal. A higher deductible effectively raises the bar for when insurance becomes useful to you at all, which means more routine dings, scrapes, and minor mishaps become entirely your problem, full stop.

Second, it changes how much cash you need available at the worst possible moment. Deductibles are typically due at the time repairs are authorized, not spread out or negotiable after the fact. A driver who chose a higher deductible to save on premium needs to be honest with themselves about whether they actually have that amount sitting in reserve, because the whole arrangement only works if the money is there when the tow truck arrives. Choosing a deductible you can’t actually pay isn’t a lower-risk choice — it’s a deferred problem.

Third, higher deductibles interact with total loss situations in a way that’s easy to miss. If your car is declared a total loss, your insurer generally pays you the vehicle’s determined value minus your deductible. A higher deductible directly reduces the payout you’d receive in the worst-case scenario, at exactly the moment you might be trying to put money toward a replacement vehicle.

How a lower deductible changes your premium

The tradeoff runs the other direction too. A lower deductible means your insurer is agreeing to step in sooner and cover more of nearly every claim, which means they’re taking on more risk on your behalf — and insurers price risk. In practical terms, a lower deductible is generally paired with a higher premium, and a higher deductible is generally paired with a lower premium. This is the mechanism behind almost every “raise your deductible to save money” suggestion you’ve seen: you’re not eliminating cost, you’re shifting it from a predictable monthly or six-month payment into an unpredictable lump sum that only arrives if and when you actually file a claim.

How much the premium moves in either direction for a given deductible change depends on your individual profile — your vehicle, your driving history, where you live, your insurer’s own pricing model — so there’s no universal figure that tells you what raising your deductible from one amount to another will save you. The only way to see the real tradeoff for your situation is to ask your insurer or agent for quotes at a few different deductible levels side by side. That comparison, done with your actual numbers, tells you far more than any general rule of thumb.

It’s also worth noting that a lower premium isn’t automatically the better deal, and a lower deductible isn’t automatically the safer choice. If you rarely file claims, a low deductible might mean you’re paying extra every renewal period for a cushion you never end up using. If you’re the type of driver who’s likely to file claims occasionally — a long commute, street parking in an area with frequent minor theft or vandalism, a household with a new driver — a lower deductible might earn its cost back more reliably. The math only makes sense in the context of your own likelihood of filing.

The decision behind the number

Once you strip away the mechanics, choosing a deductible comes down to a fairly personal question: how much unplanned expense could you absorb without real disruption, and how does that compare to what you’d save on premium by carrying more of the risk yourself?

A few practical angles can help sharpen that question:

• What could you actually pay today, without borrowing, if your car needed repairs tomorrow? That number is a more honest ceiling for your deductible than whatever figure sounds reasonable in the abstract. A $1,000 deductible that you’d have to put on a credit card at a high interest rate isn’t really saving you money, it’s just relocating the cost.
• How old and how valuable is the car? On an older vehicle worth relatively little, a very low deductible on collision or comprehensive coverage can end up close to the value of the car itself, which is worth noticing — some drivers in that position choose to raise the deductible substantially, or reconsider whether they need collision and comprehensive coverage on that vehicle at all, since the payout ceiling and the deductible can end up uncomfortably close together.
• How often do you expect to file a claim, honestly? Long highway commutes, teenage drivers on the policy, street parking in a dense area, or a history of minor incidents all push toward more frequent claims, which tilts the math toward a lower deductible despite the higher premium. A garage-kept second car driven a few times a week points the other way.
• Do you have an emergency fund that’s separate from this decision? If you already keep cash reserved for unplanned expenses, a higher deductible is less risky for you than it would be for someone relying on the insurance payout itself to be the emergency fund.

None of this has a universally correct answer, which is exactly why it’s worth treating as a decision rather than a default setting you inherited when you first bought the policy or that your insurer nudged you toward at renewal. Deductibles set years ago, at a different income level or with a different car, quietly stop matching your actual situation, and nobody flags that for you — the number just sits on the declarations page until a claim forces you to look at it.

The practical move is simple even if the reasoning behind it takes some thought: pull up your current declarations page, find your comprehensive and collision deductibles, and ask yourself whether those specific amounts still fit the car you’re driving and the cash you’d have on hand if you needed it. If they don’t, call your agent or insurer and ask what premium changes at a few alternative deductible levels — that’s the concrete number that turns this from an abstract tradeoff into an actual decision you can make with confidence.

What Collision Coverage Pays For

Collision coverage pays to repair or replace your own car after it hits, or is hit by, another vehicle or object — a guardrail, a parked car, a tree, a pothole that flips the physics of a bad afternoon. It also applies if you roll the car on your own, with no other party involved at all. The defining feature is that fault doesn’t matter. Whether the accident was your mistake, someone else’s, or nobody’s, collision coverage responds to damage on your car.

This is different from liability coverage, which pays for damage you cause to other people’s property or bodies, and different from comprehensive coverage, which pays for damage to your car from things other than a collision — hail, a falling branch, a deer, theft, vandalism. Collision and comprehensive are often sold together as a pair, sometimes called “full coverage,” but they are two separate coverage lines with two separate premiums and two separate deductibles. You can carry one without the other, and understanding that distinction is the first step toward understanding when either one is worth keeping.

Collision coverage always comes with a deductible — the amount you pay out of pocket before the coverage pays the rest. If your deductible is a few hundred dollars and a repair costs a few thousand, insurance covers the difference. If the deductible is close to the repair cost, the coverage barely does anything. That relationship between deductible and repair cost is the seed of everything else in this article.

How a Vehicle’s Value Affects the Math

Collision coverage has a ceiling, and that ceiling is your car’s actual cash value — roughly, what the car was worth on the used market right before the accident, not what you paid for it and not what it would cost to buy a similar new one. Insurers will not pay more to fix a car than the car is worth. If a repair estimate comes in higher than the car’s cash value, the insurer instead declares the car a “total loss” and pays out the cash value (minus your deductible) rather than authorizing the repair.

This matters because cars depreciate steadily, often losing a meaningful share of their value in the first few years and continuing to lose value every year after that, while insurance premiums don’t fall at the same pace. A ten-year-old car with high mileage might have a cash value low enough that even a moderately serious accident totals it. A newer car with the same style of damage might get repaired instead, because its cash value comfortably covers the estimate.

So the ceiling on what collision coverage can ever pay you keeps shrinking as the car ages, even while the coverage keeps costing roughly the same to carry, or falls only slowly. At some point the cost of carrying the coverage for a year starts to look large next to the maximum amount it could ever actually hand you.

There’s a second piece to the value question: the deductible eats a bigger share of a smaller payout. On a car worth a substantial amount, a several-hundred-dollar deductible is a small fraction of the eventual claim. On a car worth very little, that same deductible might be a third, half, or more of what you’d actually receive. The coverage still technically works, but the amount left over after the deductible can feel disproportionately small relative to what you’ve been paying to keep the coverage active.

When the Premium Can Exceed the Payout

Here is the comparison that actually matters, and it’s one most drivers never sit down and do: multiply what you pay annually for collision coverage by the number of years you expect to keep the car, and compare that running total to the car’s current cash value minus your deductible. That second number — cash value minus deductible — is the most you could ever collect from a collision claim on this car, right now. If several years of premium payments would add up to more than that maximum possible payout, the coverage has quietly become a bad trade, at least in strict dollar terms.

This crossover point sneaks up on people because it happens gradually and nothing announces it. Nobody sends a notice saying “your car’s value has now dropped below the threshold where this coverage still makes sense.” The premium keeps renewing automatically, often lumped in with liability and comprehensive on one bill, and it’s easy to keep paying for coverage that’s mathematically outmatched by the car’s own depreciation.

The other way this shows up is in a low-value car that’s expensive to insure for reasons unrelated to the car itself — a driving record with recent claims, a high-risk location, a younger driver on the policy. Collision premiums are priced on risk broadly, not just on the car’s value, so it’s entirely possible to have an inexpensive old car paired with a collision premium that isn’t especially low, simply because other rating factors are pushing the price up. In that situation the imbalance between premium and potential payout can appear well before the car looks “old” by any other measure.

None of this means collision coverage is a bad product. On a car with real remaining value, it does exactly the job it’s supposed to do: it converts an unpredictable, possibly severe loss into a small, predictable annual cost. The point where it stops being worth it is specifically the point where the car’s value has fallen far enough that the “severe loss” it protects against isn’t severe anymore — because the car wasn’t worth much to begin with.

How to Think Through the Decision

A few practical checkpoints can help make this less abstract.

• Find the car’s current cash value. Several online valuation tools will give a working estimate based on the car’s year, mileage, and condition. This isn’t a legal appraisal, but it gives you a number to work with instead of a guess.
• Look up your actual collision premium and deductible. These are both on your policy declarations page, usually listed separately from liability and comprehensive. If you’ve never located this page, it’s worth doing once — it’s usually one or two pages near the front of your policy documents.
• Do the subtraction. Cash value minus deductible is your real ceiling. Compare that ceiling to what you’d pay in collision premium over the next several years if nothing changes.
• Factor in what you could actually afford to lose. If you have enough savings set aside to simply replace the car outright if it were totaled tomorrow, the coverage is doing less work for you than it would for someone who couldn’t absorb that cost. If replacing the car would be a genuine financial problem, that pulls the decision back toward keeping the coverage even on a lower-value car.
• Check whether the car is financed or leased. Loan and lease agreements frequently require you to carry collision and comprehensive coverage as a condition of the financing, regardless of what the math above says. If there’s still a loan balance, dropping collision coverage may not be a choice available to you until the loan is paid off — read your loan agreement, not just your insurance policy, before making a change.
• Reconsider deductible level before dropping coverage entirely. Sometimes the better move isn’t cancelling collision coverage outright but raising the deductible, which lowers the premium while keeping some protection in place for the higher-value scenario. This is a middle option worth pricing out with your insurer or agent before jumping straight to “keep it” or “drop it.”
• Revisit this yearly, not once. A car’s value and your premium both drift over time, usually in opposite directions on the same car. A decision that made sense last year isn’t guaranteed to still make sense this year. Building this comparison into your annual policy renewal — right when you’re already looking at the bill — is a natural place to repeat it.

One more thing worth separating out clearly: this whole calculation is about collision coverage specifically, not comprehensive coverage. Comprehensive premiums are often lower than collision premiums to begin with, and the events it covers — theft, weather, animal strikes — don’t correlate with the car’s age the way collision claims loosely do. Many drivers who drop collision on an older car choose to keep comprehensive, since it tends to cost less and covers a different, less predictable set of risks. Whether that split makes sense for you depends on the actual numbers on your own declarations page, not a general rule, so it’s worth running the same premium-versus-payout comparison for comprehensive on its own before deciding.

The underlying idea, stripped of all the arithmetic, is simple: insurance is worth carrying when the potential loss is large relative to what you can comfortably absorb, and worth reconsidering when the potential loss has shrunk to the point where the premium itself is the bigger number. Collision coverage on an aging car is one of the clearest, most concrete places in an auto policy where that crossover actually happens and can be checked with numbers already sitting on your declarations page.