•  

Is it time to drop Full Coverage auto insurance?

Date: Aug 02 2009
Filed In: Auto Insurance101

Sometime you don’t need to spend extra money to have full coverage. Here are the 4 questions you need to ask yourself if it is worth it for you to have full coverage or not.

As your car ages there is no point to pay for the comprehensive and collision coverage. At some point in time it makes more sense to drop the full coverage since your car doesn’t worth that much and you might be paying more money to cover it than what you car’s is worth. You might just be wasting money on something you don’t really need.

Physical Damage coverage is “Full Coverage”
It is good to understand what “full coverage” really mean before you go ahead to drop it. A full coverage is another way of saying comprehensive and collision coverage. Comprehensive coverage or (comp) covers the physical dames of your car when it is not involved in a collision. For example, shattered window/windshields, vandalism, even hitting an animal which cause physical damages to your car ate all cover by the comprehensive coverage.

The collision coverage is when you are involved in and at-fault of the car accident. Your car and other car involved could be damage. The collision coverage covers the physical damages to your own car if you hit another car, or hit an object and the accident is your fault. Both comprehensive and collision coverage make up the “full coverage”.

Here are the 4 questions you need to ask yourself first before deciding to drop your full coverage. Read below…

Question #1: Do you owe any money for your car?
If you still owe money to your car you might want to keep your comprehensive and collision coverage because your finance company will require you to do so. Before dropping your full coverage when you are still leasing and financing your car you need to ask your bank first.

Question #2: What is your replacement cost?
The comprehensive and collision coverage covers the physical damage of your car. If your car is very old and doesn’t worth much money, it may be wise to consider dropping the full coverage. For example, if your are paying about $500 dollars a year for your comprehensive and collision for your auto insurance and your car is only worth $1500. You should consider dropping your full coverage. In about 4 years you will be paying $2000 dollars for the full coverage while the car is only worth about $1500 dollars.

Question #3: Raise deductibles or drop full coverage?
Overall your collision coverage is more expensive than your comprehensive coverage. If you are a sage driver with older car, you might want to consider dropping the collision on an older.

Instead of dropping the full coverage, you might want to raise your deductibles. By having higher deductible you can carry more of the risk associated with driving and if you do get into an accident with another car and it’s your fault. You would still have the coverage for your car and the car your hit. If you decide not to pay the deductible since the car is too old, you can just scrap that car and get a new one. That is why it is cheaper to have a $1000 deductible than a $250. If you just want to save money but don’t feel safe dropping the full coverage you could just raised your deductibles.

Question #4: Peace of mind with full coverage?
You want to save money, but you don’t feel safe driving down the highway without full coverage, then it is probably not a good idea to drop your full coverage. If you are too anxious and worry about not having a full coverage, then don’t drop your full coverage. An anxious and worry driver is a bad driver. Before you drop your coverage, you must make sure you comfortable with it. You may save money but you lose sleep. So think before you drop the full coverage..

Related Articles:


Share |

Write a Comment