Do You Need Collision And Comprehensive Auto Insurance?
Are you reevaluating your auto insurance policy and wondering if you need to have collision and comprehensive coverage? It will help to know the following things about these auto insurance products and determine if you need them.
What's Collision And Comprehensive Insurance?
It helps to understand what the difference between these two types of coverage are. Collision coverage will protect you if you were to collide with another vehicle or object while the car is in motion. This coverage helps repair the damage done to your car if you were at fault for causing the accident. Comprehensive coverage will cover everything else. This includes a shattered windshield from a rock on the freeway, your car catching on fire in your home's garage, flood damage, theft, and vandalism, for example.
When Are Collision And Comprehensive Insurance Required?
Know that if you are still paying off your car to a lender, you are likely required to have collision and comprehensive coverage while you still owe money on the loan. That is because the vehicle technically belongs to the lender, and they want to ensure that you will not total the vehicle beyond repair and stop making payments on it. You will only be allowed to drop these two types of coverage once the vehicle has been completely paid off.
What Are The Limits Of Collision and Comprehensive Insurance?
One thing to be aware of when it comes to collision and comprehensive insurance is that it is only worth the value of what your vehicle is worth. This is not the value of what you purchased the vehicle when you drove it off the lot, but the value of the vehicle today if you were to sell it. This means that the maximum value of these policies will diminish over time as the car gets older and there are more miles on the vehicle. Know that it is possible for the cost to repair your vehicle to be more than the value of the car, and you'll be given a cash value of the car's worth rather than having the damage repaired.
When Is it Time To Drop Collision And Comprehensive Insurance?
The secret to knowing when it is time to drop additional coverage is when it is no longer worth it financially. Consider looking at the amount that you are paying and what your car is worth. For example, if your vehicle is only worth $4,000, then you may not think it's worth paying an extra $400 a year for collision and comprehensive coverage. That money may be better off going into savings to pay for your next vehicle when you eventually need a new one.
