Carrying comprehensive automobile insurance coverage on a newer car can be a very smart idea. If your vehicle is financed, comprehensive coverage may even be required by your lender. When, however, should you begin to question the value of paying for comprehensive coverage on an old beater?
As mentioned, if you have a loan on your vehicle, you may not have a choice. Your bank or lender may ask that you carry comprehensive coverage on your car for as long as they hold the note, or title, to the vehicle. This protects their interests in the event your car is severely damaged.
The more challenging question comes when you no longer owe money on your vehicle. You may be paying a significant amount to cover it not just for liability but for damages it sustains in an accident or if it were to be stolen. You may even be hoping it will be stolen.
The point is, value for the coverage you receive may not warrant the higher premiums you may be paying. This can be particularly true if you have a high deductible.
Generally, many experts believe you should not pay for comprehensive and collision coverage if your premiums exceed about 10% of your vehicle’s value.
In a real-life example, let’s say your vehicle’s actual cash value is $5,000. If you have a $500 deductible on your comprehensive coverage, the MOST you could recover if your car were “totaled” in an accident or never recovered if stolen is $4,500. Most experts would suggest if your premium to carry comprehensive coverage on that vehicle is $450 annually, (10% of the maximum $4500 the insurance company would pay) you should consider dropping your comprehensive coverage.
Of course, you need to keep in mind all states mandate minimum coverage for liability insurance, so we are not suggesting dropping insurance entirely. There may come a point, however, when it is financially prudent to consider not carrying comprehensive coverage on an older car.
Of course, your situation may vary according to your personal finances and your ability to withstand a significant personal monetary loss. If you have any questions, we certainly invite you to contact us. Our independent agents can not only help in your decision to the amount of automobile insurance you should carry but can even help you find providers who may offer better rates for your specific situation. Contact us. Let us help you pay less for more.
Do you have questions about your insurance? Find an insurance agent near you with our Agent Finder
Search for a local agent with our agent finder map.
Read more about KayLynn's background.
Waiting to purchase life insurance just may limit your options. Here’s how to maximize your choices when buying life insurance.
Today’s Online Driving Schools are Convenient and Affordable…and May Save You Money
Wind Storms Can Bring Serious Damage No Matter Where You Call Home
Talking cars, funny aliens and horses on telephones are just the start of television’s craziest premises for shows. Oh, and there’s the Flying Nun.
Positive Comments and Testimonials Have Real Value
There Was a Life Insurance Version of the Milk Man and Home Doctor Visit
Being Prepared with the Appropriate Info Can Help Make Claims Smoother
There Can Be Both Humor and Horror Found in Real Estate Themed Movies.
Strong woman with impeccable voices helped lead the way for generations of female singers. Here are six of the most impressive.
A Dollar Saved Is Not Always a Dollar Earned in Business