Insurance that covers only your property may be sufficient. You may be required to have this insurance if you still owe a loan on your car. These aspects can be kept or dropped if you have paid off the car. These parts of your auto insurance policy can be removed or reduced to lower your premiums.
Collision insurance covers the costs of repairing your vehicle if it is struck by another car. Collision insurance can also cover damages to your vehicle if it is hit by another vehicle, such as a tree.
Comprehensive insurance is also known by the “Other than Collision” acronym. This section of your auto insurance policy covers damages due to flood, vandalism or contact with animals.
Both collision and comprehensive insurance cover damage to your vehicle, but not another person’s. You can choose to remove these coverages from your policy. If your car is leased or has a lien on it, you will probably not be allowed to do this because the owner or lender of the vehicle will want their rights protected.
Your vehicle insurance policy’s liability section is the main part that covers damages to others. The amount of money that the other person might receive if you collide with another vehicle is not affected by the fact that you don’t have collision coverage.
Why should you eliminate collision insurance?
This section of your auto insurance policy could have higher premiums than you are willing to pay. The insurance company will only pay the book value of your vehicle if it is totaled. You may decide that the insurance company’s potential return on collision insurance is not worth the cost of collision insurance. You can request your insurance company to lower or drop coverage if you have your car clear and unrestricted.
Reduce your coverage can help reduce collision coverage. You will still get some protection, but your rates will be lower. You may be able to increase your deductible by talking to your lender or leasing agent.
Why should you drop comprehensive insurance?
It is possible to reduce or eliminate car comprehensive insurance in the same way as dropping collision insurance. Comprehensive insurance costs less than collision insurance so you might want to keep it even if you drop collision coverage.
You may not be allowed to cancel the coverage if your vehicle is leased or has a lien. The lien holder or leaser may be able to lower the coverage by increasing your deductible. Although this will reduce your costs, it won’t be as drastic as reducing the coverage completely.
As they age, most autos lose their value. This decreases the amount that insurance companies will pay to replace or repair an automobile. You may eventually feel that the premium for collision and comprehensive coverage on your auto insurance is too high. The point at which you feel comfortable with risk is what will determine when this point occurs.
You take on more risk by removing comprehensive and/or collision insurance coverage. This may be a good option if you feel you are less likely to be in an accident than you should, and you drive safely. Your car will be less likely to be damaged by other than collision insurance if you store it. You may also want to consider these risks if this is the case.
