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When To Drop Full Coverage Auto Insurance

If you are thinking about dropping full coverage because it is expensive, you should compare auto insurance rates with competitive insurance carriers. Every company uses different criteria to determine rates, and you may be able to find full coverage from a cheap auto insurance company. You should also review your current policy and drop unnecessary extra services. Still, read our blog and find out when to drop full coverage auto insurance.

  1. car-insurance-1When you fully own the car. If you are still paying for the vehicle you want to insure, it is likely that the lienholder will include a provision that requirespurchasing full coverage. When you finally own the car, the option of keeping full coverage or not is up to you to decide.  And many people who do not see the purpose of paying more on car insurance usually drop full coverage. So, even if you do not want this coverage, you will have to wait.
  2. When your emergency funds are sufficient. If you have enough money put aside and you could pay for an entire replacement car in cash and only reduce your fund by half or less, you don’t need collision or comprehensive insurance. Liability insurance should be the only policy you would need.
  3. When the car becomes old and its value has really depreciated. Usually this rule of thumb applies to cars older than 10 years and have more than 100.000 miles accumulated. You should check the Blue Book value before deciding to drop coverage or not.  If your car is worth a few hundred or thousand dollars above your deductible amount then look at the cost of carrying full coverage on the car and decide if it is financially beneficial to keep it.  If the value of the car is not that big and you can easily afford repairing it or switching it, consider dropping full coverage.

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