THURSDAY, MAY 5, 2022
It always feels good to make that final payment on a loan, especially when it is your vehicle with a long life ahead of it. Getting rid of that big payment every month is a good thing, but for some people, it may mean reducing the amount of auto insurance they carry. Should you change out your car insurance for a less expensive option? Before you make the decision to do that, consider a few important factors that could influence your decision to make such a change.
Must Have and What You May Drop
In nearly all states, it can be a requirement to carry general liability insurance. This type of insurance does not protect you or your vehicle but rather the other people involved in an accident that you cause. This is the type of insurance you cannot drop but must maintain to legally operate your vehicle in the state. Most people have additional insurance including comprehensive coverage, medical payments and collision insurance. These are considered optional plans in most cases. But, whether or not you drop them is a decision you have to make regarding your situation.
When is it a Bad Idea to Reduce Your Coverage?
Let’s say you own a vehicle with just liability insurance. You’re involved in a car accident. Your vehicle is damaged and needs extensive repairs. Can you afford to make those repairs without having insurance to help you to cover it? More so, if your vehicle is totaled, could you afford to purchase a new vehicle to replace it? If on the other hand, you maintained comprehensive coverage, you may not have to make any additional purchase. Rather, your auto insurance steps in to cover these losses for you, assuming you have the right type of coverage for the incident.
If your vehicle may be very low in value and can be unlikely to last very long, you may not need a large policy to cover its value. However, if and when you cannot afford to replace the vehicle if it is totaled, it is usually a good idea to carry car insurance that can help you through the repairs or replacement of the vehicle instead.
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NOTICE: This blog and website are made available by the publisher for educational and informational purposes only.
It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional
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