Once you have your car loans paid off and there are no requirements concerning auto insurance, you may be able to drop both collision and comprehensive coverage. Personal Liability (PL) or Property Damage (PD) will still be needed so that you meet your state’s minimum coverage requirements, but you will not have to worry about covering your vehicle for its replacement value once it has considerably decreased. You may choose to carry collision insurance since it will still protect you if you are involved in an accident.
Collision Vs. Comprehensive Insurance
Collision insurance only covers damage that was the result of some type of collision, with either another vehicle or a stationary object. Comprehensive, on the other hand, covers all types of damage to your vehicle including damage from a flood, fire, hail, etc., as well as personal liability. It also protects any personal possessions you had in your vehicle if it was broken into or vandalized. For many drivers, collision insurance may not be a requirement, but it can be a true lifesaver if you are involved in a collision. This gives you the protection you need to keep your vehicle on the road.
Do You Really Need Comprehensive Coverage?
In most cases, the only time comprehensive insurance is required is if you are driving a vehicle you have leased or you still carry an outstanding loan on your car. Comprehensive insurance costs more than other types of policies because it covers many types of losses, including glass coverage.
Comprehensive car insurance covers any unexpected incidents such as an accident, fire, theft, collision with animals, or natural calamity. Insurers often sell collision and comprehensive car insurance together as a package. Your leasing company or lender will generally require you to purchase collision and comprehensive insurance if you have taken your car on lease or have a car loan. This is to ensure that you do not default on your loan if your vehicle is totaled or stolen. However, once your loan is paid, you may not always need to carry comprehensive insurance.
What Are the Benefits of Collision Coverage?
Collision insurance is rather limited since it only covers damage to your vehicle that was associated with an accident or collision. You can make your coverage even more affordable by raising your deductible. The benefits of having collision coverage are many. You not only are protected against damage caused in a wreck, but you also have the peace of mind that comes with knowing you have a policy in place that will help you get your car back on the road when you need it most.
If you have recently paid off your auto loan or lease, you may want to consider dropping your comprehensive coverage. When your vehicle has lost the majority of its value due to age or excessive miles, you may consider dropping your collision coverage as well. Contact our agents at Mayer Insurance if you have questions concerning the amount of coverage you need. We will discuss your options with you so that you can make an informed decision. Since there are multiple types of coverage to choose from, you must know the basics for each one so you can make an appropriate decision.