Are You Paying for Car Insurance Coverage You will Never Use?

When you purchase or renew your car insurance, you're often presented with a menu of optional "add-on" coverages beyond the standard liability and physical damage protection. These extras, like rental reimbursement, roadside assistance, or custom parts coverage, are designed to offer convenience and fill specific gaps. However, many U.S. drivers check these boxes without a second thought, paying extra every month for benefits they may already have through other services or that they are highly unlikely to ever use. Auditing your policy for this kind of redundant or unnecessary coverage is a simple but powerful way to trim your premium without sacrificing essential protection.

What Are These Optional Coverages and How Do I Find Them?

These extra coverages are listed as separate line items on your policy's declarations page, each with its own small premium. Your first step is to identify them. The most common ones you'll see are:

Once you've identified which of these you are paying for, the next step is to determine if they are truly necessary for your specific situation. This involves looking at other services you already have and making an honest assessment of your needs.

What is the Step-by-Step Process to Eliminate Unneeded Coverage?

Trimming the fat from your policy is a logical process of evaluation and action. Follow these steps for each optional coverage you're currently paying for.

First, **check for overlapping benefits**. Do you have a AAA membership? If so, you likely don't need the Roadside Assistance coverage from your insurer. Does your premium credit card offer rental car insurance as a perk? That might make your Rental Reimbursement coverage redundant. Read the fine print of these other services to ensure they provide adequate coverage, and if they do, you've found an easy saving.

Second, **evaluate your personal needs and vehicle status**. If your car is completely stock with no modifications, you can drop Custom Parts & Equipment coverage. If you have paid off your car loan or owe less than the car is worth, you can immediately cancel your Gap insurance, as it provides you no benefit. If you have excellent health insurance with low deductibles, you may not need high limits on optional Medical Payments coverage.

Third, **contact your insurance agent**. Once you've identified a coverage you want to remove, simply call your agent and ask them to remove it from your policy. They will process the change, and you should see the savings on your very next bill. Make sure you get an updated declarations page reflecting that the coverage has been removed.

2025 Update: The Unbundling Trend

In 2025, more insurers are "unbundling" their products, allowing for greater customization. This is a direct response to consumer demand for more transparency and control. In the past, roadside assistance might have been automatically included in a "Gold Package." Now, you can often add or remove these features a la carte through the insurer's app. This makes it easier than ever to avoid paying for things you don't need. However, it also places more responsibility on you, the consumer, to actively manage these choices. The default option may not be the most cost-effective, so it's critical to go through the customization process during your quote to ensure you're only selecting the add-ons that provide real value to you.



Real-Life Examples: Cutting the Fat

Let's look at how U.S. drivers made smart decisions to stop paying for unneeded coverage.

Scenario 1: The Redundant Roadside Assistance

You have been paying an extra $5 a month ($60 a year) for roadside assistance on your auto policy. You also have a premium AAA membership that costs $100 a year, which you keep for its other travel benefits. You realize that both services cover the exact same things: towing, jump-starts, and lockouts. You call your insurance agent and drop the redundant roadside coverage, saving an easy $60 a year since your AAA plan already provides superior protection.

Scenario 2: The Paid-Off Car and Gap Insurance

Imagine you bought a new car three years ago and purchased gap insurance through your auto policy. Today, you check your auto loan statement and see you only owe $14,000. You look up your car's value on Kelley Blue Book and find it's worth $19,000. Because the car is worth more than you owe, the "gap" is gone, and the gap insurance you're still paying for provides zero benefit. You immediately call your insurer and cancel it, saving $8 a month.

Scenario 3: The Custom Car That Went Stock

When you were younger, you had a car with expensive aftermarket wheels and a high-end stereo system, so you added $5,000 in Custom Parts & Equipment (CPE) coverage. Years later, you're driving a standard family SUV with no modifications at all, but you never removed the old CPE coverage from your policy. After auditing your declarations page, you spot the $10/month charge. You call and have it removed, saving $120 a year on coverage that offered no protection for your current vehicle.

Common Mistakes to Avoid

The biggest mistake is dropping a coverage without understanding what it does. For example, Medical Payments (MedPay) might seem redundant if you have health insurance, but it can be very valuable for covering deductibles and co-pays for you and your passengers. The second error is assuming your credit card's rental coverage is a perfect replacement. Many credit card policies are secondary to your personal auto insurance and may not cover all types of vehicles or loss-of-use fees. Always read the fine print. Finally, don't cut too deep. While saving money is important, eliminating a coverage that you genuinely might need, like rental reimbursement if you have no backup vehicle, can be a costly mistake if you have a major claim.

FAQ

Is it ever a good idea to have both AAA and insurance roadside assistance?

Rarely. The services are almost always overlapping. AAA often provides a higher level of service (like more towing miles), so it's usually best to keep AAA and drop the cheaper insurance add-on.

When should I definitely keep Gap Insurance?

You should keep gap insurance for as long as you are "upside down" on your car loan, meaning you owe more money to the bank than the car is actually worth. This is most common in the first 2-3 years of a new car loan.

Will my health insurance cover me in a car accident?

Yes, your health insurance will cover your medical bills after you've exhausted any primary auto insurance medical coverage (like PIP or MedPay) and paid your deductibles. Having MedPay can help cover those out-of-pocket health insurance costs.

Can I add these coverages back if I change my mind?

Yes. You can typically call your agent at any time to add or remove these optional coverages as your needs change.

Key Takeaways