You can decide not to carry insurance that protects only your property. If you still have chattel mortgate or lien against your automobile, the agreement you have with your lender may force you to carry this type of protection. If you have paid off your car, you can decide to keep or drop these aspects of your policy. You can slash your car insurance premiums if you eliminate or reduce these parts of your insurance policy’s protection.
Collision insurance can compensate you for your car ‘s damages when your insured vehicle hits or is hit by another car. It can also pay for the cost to repair your car when your insured auto hits a fixed object such as a firehydrant.
Comprehensive insurance is also known as “Other than Collision.” This portion of your auto insurance policy pays for damages caused by flood, vandalism, contact with birds or animals, etc..
Since both collision insurance and comprehensive insurance pay for damage to your automobile and not someone else’s, you are allowed to decide whether or not to drop these from your policy. However, if your vehicle is leased, or you have a lien on your car, you probably will not be able to do so because the actual owner of the auto or the lender will want their interests protected.
The liability portion of your automobile insurance policy is the primary aspect 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 Drop Collision Insurance?
The premiums for this part of your auto insurance coverage 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 amount the insurance company might pay has diminished enough that the cost of the collision insurance is no longer justified by the potential payment you might get from your insurance company. If you own your auto free and clear you can ask your insurance company to 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 lien holder or leaser may allow you to raise the deductible since this protects their interests to some degree.
Why Should You Drop Comprehensive Insurance?
The thought process behind cutting or reducing vehicle comprehensive insurance is the same as the logic associated with dropping 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 vehicle 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 rates, although not as much as completely dropping the coverage would.
Most automobiles 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 car. At some point you may feel that the amount of premium your auto’s collision or comprehensive coverage adds to your auto 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 since you drive safely this may make sense for you. If you garage your automobile your car is perhaps less likely to be impacted by the perils that other than collision coverage protects you against. If this is the case, dropping this coverage may be the right thing.