Reducing Your Monthly Expenses for Collision and Comprehensive Car Insurance Expenses
Collision and Comprehensive insurance are optional auto insurance coverages. If you still have a lien against 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 vehicle, you can decide to keep or drop these aspects of your policy. You can lower your auto insurance premiums if you remove or reduce these parts of your insurance policy’s protection.
Collision insurance can pay for your vehicle ’s damages when a covered car hits or is hit by another car. It can also compensate you for damages that occur when your insured auto hits a something other than a car such as a road sign or a tree.
Comprehensive insurance is also known as “Other than Collision.” This part 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 compensate you for damage to your auto and not someone else’s, you are allowed to decide whether or not to drop these from your policy. However, if your auto is leased, or you have a lien on your auto, you probably will not be able to do so because the actual owner of the vehicle or the lien holder will want their interests protected.
The liability portion of your automobile insurance policy is the primary portion of the policy that pays others for their damages. If you collide with another auto and you don’t have collision insurance, it won’t matter since your liability coverage will pay the other party.
Why Should You Eliminate Collision Insurance?
The costs for this part of your automobile insurance policy may be more than you want to pay. If your vehicle is totaled, the insurance company will only pay you its book value. At some point, you may feel that the car’s value 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 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 cut thepremiums 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 cutting or reducing car comprehensive insurance is the same as the thinking 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 monthly premiums, although not as much as completely dropping the coverage would.
Most cars lose value as they get older. This reduces the amount of money that an insurance company is likely to pay to repair or replace a automobile. At some point you may feel that the amount of premium your car’s collision or comprehensive coverage adds to your automobile insurance bill is too much. Exactly when that point comes is determined by your personal comfort level with risk.
Cutting 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 vehicle your vehicle is perhaps less likely to be stolen or vandalized. If this is true, dropping this coverage may be the right thing.
Alston Balkcom has been a licensed insurance agent for almost a quarter of a century. He now manages several insurance-related websites. <a href="https://1800insurancect.com/Health/student-health-insurance-quotes.htm">Cheap health insurance for students</a> information on his sites. His latest blog posts include <a href="http://automobile-insurance-now.com/blog/2009/10/when-should-i-cancel-collision-insurance.htm">When Should I Cancel Collision Insurance?</a>
