Lots of people want to know when the magical date will arrive that they can drop full coverage on their vehicles and save some money on their insurance.  Today I’ll share some information to help you make the right choice.

We use the term “full coverage” to refer to collision and comprehensive coverage for your vehicles.  Collision repairs or replaces your vehicle if it is damaged in an accident you cause.  And comprehensive repairs or replaces your vehicle from damage caused by other factors – like wind, hail, or vandalism. 

These two coverages together are the only things that repair YOUR vehicle.  Liability coverage only repairs damage that you cause to others. 

So when is it okay to quit covering your car?  

First of all, if you owe money on the car, you will be required to carry full coverage.  The lienholder (or lender) won’t allow you to drop the coverage because they want a guarantee that the car will hold value if they need to repossess it.  Most lenders also require that you keep no more than a $500 deductible at all times.

Once the car is paid off, you may decide to keep the full coverage, but raise your deductible to $1000 in order to save a little money but still have coverage.

The next question?  How much is the car worth?  If the car is much older and higher mileage, it may not be worth a whole lot.  You can use a website like www.kbb.com to find out the value of your vehicle.  The insurance company will generally pay around this amount if your car was totaled in an accident.  (This is not exact and will vary depending on location and resources that the insurance company uses, but it’s a good tool to estimate.)

If your car is worth very little, you may decide to take the risk and not pay for full coverage, knowing that you’d be out of pocket in an accident.

Next question…what would you do if the car was totaled?  Do you have money in savings to go out and buy a new car?  Would you end up stuck with a new car payment too?  Really consider what would happen if you dropped the coverage and totaled the car tomorrow.  For many people, it’s better to pay a few dollars extra and know they have options if there is an accident.

If you’re unsure or just want to get more information, call us today to review your policy.  We can tell you the price with and without full coverage as well as give some personalized options in between.  We want to keep you protected for the best price possible!