You get a copy of your car insurance policy in the mail and you can’t believe the cost. For one six-month period, you may be paying several hundreds of dollars. While the coverage is required by law, the cost can hit your budget hard. To reduce the cost of premiums, you may think about dropping the most expensive portion of your policy – the comprehensive/collision coverage.
Things to Consider When Dropping Full Coverage
Also known as full coverage car insurance, comprehensive/collision insurance is usually an important part of your policy. Before you decide to drop it, realize that you will have no help in paying for repairs if the vehicle is damaged. It will be all out-of-pocket expenses.
Your lender may require full coverage if you have a loan on your vehicle. If you drop the coverage, they may terminate your loan or buy coverage for you and add it to your monthly payments. This protects their investment if your vehicle should be damaged.
If you own an expensive model or a classic, repairs may be more costly than what you can afford. Insurance coverage will pay for those repairs minus a deductible. It’s often a lot easier to budget in a $500 or even a $1000 deductible than to pay for a new vehicle or to repair your damaged one.
Rather than cancelling your full coverage, you could raise your deductible so that your rates go down. This can save you enough money to ease the financial burden that often comes with having car insurance.
You can also shop around and try to find a provider for both your car and home insurance, which will often help you save money. There are several discounts that will help you reduce your monthly premiums and make the policy more affordable.
When Liability Is Best
There may be times when having liability only coverage does make sense. For instance, if you have an older vehicle that has very little value, it may not make sense to have full coverage. Chances are pretty good that it will be totaled out if you are involved in an accident, and you will have to replace it. In this case, liability coverage may be all you need. Just don’t forget to save money for another vehicle in case
you are in an accident.
Another time when you may only want liability is if you aren’t driving your vehicle. An example is when someone goes to college or works overseas for a period of time. They often think of cancelling their policy, but it may be more expensive when they go to get a new policy later on. Many providers charge more if you haven’t had coverage in the last six months even if you don’t have a car.
Instead of cancelling your policy when you won’t be driving for a while, get the lowest amount of coverage you can until you need more later. This can be a great way to save money and keep you insured.
ASA Insurance provides excellent coverage for car and home insurance in the Salt Lake City area with the lowest rates to the English and Spanish communities. Affordable rates and superior service for all home, auto and business/commercial insurance needs.