When Should Comprehensive Car Coverage Be Dropped? Comprehensive auto insurance covers acts of God damage, but at a cost. A type of uh-oh auto insurance that covers the unexpected, comprehensive is often a good idea. It steps in with financial help after acts of God, such as tornadoes or hail storms, falling debris or run-ins with animals, and even if theft or vandalism damages your vehicle. However, not all states require it, not all vehicles need it and some budgets cannot afford it. Legal Restrictions o Comprehensive car insurance is not legally required by any state. But policies that cover liability, personal injury protection, and even uninsured motorists are slowly being added to mandatory auto insurance requirements in most states. With insurance mandates at the state level, comprehensive insurance is still at your discretion, particularly if you are only trying to meet your state's minimum coverage requirement. Budget Restraints o If you cannot afford the extra cost of comprehensive auto insurance, dropping the policy may save you more money in the end. Most comprehensive policies cost an average driver $100 to $300 per year, with deductibles that need to be around $500 per incident to keep rates down. As your claims increase, your rate will go up as well, even if the damage was not your fault, as is often the case with act-of-God or theft circumstances. If you can afford the extra coverage, comprehensive is worth your while. Otherwise, an emergency savings account to cover unexpected car repairs may be more feasible. For a list of your state's average insurance premiums as of 2010, see Resources. Vehicle Worth o According to the CNN Money website, you should drop your comprehensive policy if your car is on its last legs, or worth less than $5,000. Insuring a low-value vehicle may be unnecessary, as the money you pay for insurance and deductibles can eventually exceed the cost of repairs. You can also drop your comprehensive if you're driving a car that has been totaled in the past, as this drastically undervalues the car's actual cash value. In the opposite vein, thieves steal some higher-value cars more than others, so take your car model's theft rate into consideration when dropping comprehensive, which covers theft. For a list of the cars in America that are most often stolen, see Resources. When You Need It o Even if you would rather not pay the additional premium, comprehensive car insurance remains necessary in some circumstances. Some bank lenders will require you to insure your vehicle with full coverage if they have financed it. This includes liability, collision, personal injury protection, uninsured motorist, or some combination of these. If you're considering canceling your comprehensive, check with your lender and insurer before cutting the fat.
Pages to are hidden for
"When Should Comprehensive Car Coverage Be Dropped"Please download to view full document