Usually the more coverage you buy the better your policy will be. But, this does not mean you should waste money for any additions that will not pay you much following an accident. When purchasing a car insurance policy consumers should balance the level of cover and the premium paid.
If you have an automobile that is reaching five years of age or more you could be paying more than you may not need too. If you consider dropping two optional and related types of coverage such as collision or comprehensive you could save a lot of money. This is a view accepted by most motorists and brokers. When the likely payout does not justify the costs, you might be better off keeping your money in the pocket.
Your insurance cost will go down drastically during the remaining years of your cars life. Assuming if you do not have a loan on the car you can drop both types of protection. Otherwise the bank may require you to keep full coverage until the car loan is paid in full. Some policyholders choose to pay off their loan so that they do not have to put up with additional policy charges.
Collision part covers most issues with your vehicle that are the results of crashing into something such as another car, the curb, a store, or maybe even a light post. It generally carries a deductible of between $250 and $1,000. Comprehensive coverage typically include every other damages to your vehicle that doesn’t fall under collision insurance.
A good way to think of the difference is collision is something you damaged and comprehensive is damage from other factors. For example, damage from wind, hail, fire and people all falls into the comprehensive umbrella. These include theft, vandalism and other accidental or weather related damages and losses. Comprehensive generally have a deductible between $100 and $300. Both together, collision and comprehensive, along with liability is typically called full cover.
If you have a car you may ask yourself if you should drop comprehensive or collision or both? Before dropping collision and comprehensive, give the choice some careful thought. Dropping collision and comprehensive parts is an error when you do not have readily available cash to pay for the fiscal impact of replacing the vehicle if it is stolen or damaged. Ask yourself, “could you replace the vehicle if it is non-operational after an accident today?”
If your car is paid off and the price has hit an all-time low due to age you might find that annual premiums to carry collision and comprehensive are too high. The cost would not match against the possible benefits of having a claim covered.
How does one know when you have reached that point? According to top car insurance companies a vehicle owner should think about dropping collision and comprehensive coverage when the automobile is worth less than ten times the amount you spend on premium. For example, if your annual premium is $650 and your car is worth $5000 then it may be time to drop the two types of covers.
Make sure to look at the price of your yearly collision and comprehensive premium. Make sure not to include liability. Then compare that number to the value of your automobile minus your deductible. You might find that your automobile holds enough price to make dropping collision and comprehensive a hard decision.
If that is the case you may want to ask yourself some questions such as “do you live in an area subject to hail, or a rustic area where collisions with animal life regularly happen?” “Is your zip code a high-crime area where cars get stolen regularly?”
If that is the case collision and comprehensive may offer higher value to you than to drivers who don’t live in locations where such risks are as great. Consider what the two coverage pays for and if you can afford the bill before you drop coverage. If dropping coverage altogether appears too risky consider raising your deductible as an alternative. That way you will get some of the savings of dropping coverage without really having to sacrifice the insurance protection.
This is the typical trend now. Drivers are opting to raise their deductible rather than drop collision and comprehensive particularly in high-crime areas. Raising a deductible from $250 to $500 could drop your coverage costs by ten to twenty percent. And raising a $250 deductible to $1,000 could save costs of over forty percent.
Depending on personal circumstances one of these options will help people save money on auto insurance. Either way, make sure you have a little money set aside for one of those unforeseen days.