You can decide not to carry comprehensive or collision insurance. If you still have an unpaid loan on your vehicle, the agreement you have with your bank or lender will probably force you to carry these coverage types. If you have paid off your automobile, you can decide to keep or drop these aspects of your policy. You can slash your auto insurance premiums if you remove or reduce these parts of your insurance policy s protection.
Collision insurance can compensate you for your automobile s damages when your insured automobile hits or is hit by another car. It can also pay for damages that occur when your insured car hits a fixed object such as a tree.
Comprehensive insurance is also known as Other than Collision. This type of coverage pays for damages caused by falling objects, fire, theft, explosion, windstorm, hail, water, flood, vandalism, riot or civil commotion, contact with bird or animal, and breakage of glass.
Since both collision insurance and comprehensive insurance pay for damage to your automobile and not someone else s, you get to decide whether or not to drop these from your policy. However, if your car is leased, or you have a lien on your automobile, you probably will not be able to do so because the actual owner of the car or the lender will want their interests protected.
The liability portion of your car insurance policy is the primary part of the policy that pays others for their damages. If you collide with another vehicle and you don t have collision insurance, that fact will not impact the amount of money the other party might get.
Why Should You Eliminate Collision Insurance?
The rates for this part of your automobile insurance policy may be more than you want to pay. If your auto is totaled, the insurance company will only pay you its book value. At some point, you may feel that the potential return has dropped enough that the premiums of the collision insurance is no longer justified by the potential payment you might get from your insurance company. If you own your vehicle free and clear you can contact your insurer and drop or reduce the coverage.
You can reduce your collision coverage by raising the deductible. This will reduce the cost and still give you some protection. Your lender or leaser may allow you to raise the deductible up to a specified limit.
Why Should You Drop Comprehensive Insurance?
The logic behind eliminating or reducing auto comprehensive insurance is the same as the thought process associated with eliminating collision insurance. However, since the cost for comprehensive insurance is less than the cost of collision insurance, you may want to keep it even after you have dropped your collision coverage.
If your automobile is leased or you have a lien on it, you may not be able to drop the coverage. However the leaser or lender may allow you to reduce the coverage by raising your deductible. This will reduce your expenses, although not as much as completely eliminating the coverage would.
Most autos lose value when they get older. This reduces the amount of money that an insurance company is likely to pay to repair or replace a auto. At some point you may feel that the amount of premium your auto s collision or comprehensive coverage adds to your car insurance bill is too much. Exactly when that point comes is determined by your personal comfort level with risk.
Eliminating comprehensive insurance coverage and/or collision coverage means that you take more risk. If your feel that you are unlikely to have an at fault accident because you have a good driving record this may make sense for you. If you garage your auto your vehicle is perhaps less likely to be impacted by the perils that other than collision coverage protects you against. If this is true, you may want to take these risks as well.
Author Resource:
Alston Balkcom has been a licensed insurance agent for almost a quarter of a century.
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