If you have a vehicle with some value and want to insure it properly you need to have at least these two optional components of a full policy. Unless it is a piece of junk, most cars are worth a lot of money even if they are older. Every extra costs money and therefore owners are expected to make choices. This post will define them, explain their use and discuss the circumstances that may justify not having or dropping them.
Liability automobile insurance; covers any harm you may cause to third parties. Every state in the US requires at least a basic form of it before a vehicle can be driven on the streets. If you want to protect your own automobile regardless of who is at fault, you would need to consider the following two common provisions.
Collision Coverage; pays for accident repairs or open market value of a totaled car following a crash with other vehicles, stationary objects and properties. As the name suggests, it refers to losses due to a crash or hit which could cause substantial damages even if it isn’t a high-speed incident.
Comprehensive Coverage; pays for damages due to most other unforeseen incidents like flood, storm, hail, fire, vandalism, auto theft and things like being hit by a falling brick or hitting an animal. Typically, it includes most things that can happen to your automobile, except collision.
They are optional as it is your own automobile and you are free to get it and make a claim in cases of the above situations. Otherwise, you would have to get it repaired out of pocket. Considering that cars are fetching a fair sum these days, potential losses can be tens of thousands of dollars. Many people may find it hard to deal with such financial crises without any compensation.
When you buy full coverage vehicle insurance these two options would be included as standard. They are usually sold together in a bundle and have a deductible amount set for each of them. That means you would have to pay the deductibles first before you can ask the company to settle the rest of the damages. That is why many motorists may choose to ignore small incidents and deal with them out of pocket. This would work out better in the long term since your auto insurance premium would have otherwise gone up.
When Comprehensive and Collision May Not Be Needed
As a general rule, people with older cars may choose not to have them, as possible losses wouldn’t be big enough to worry them. Instead, they may prefer starting to save for a new ride whenever it is needed. The commonly agreed threshold is about $4000. Considering deductibles and premium increases. Any automobile with a value less than this amount may not be worth bothering to insure or it may be all right to drop if you already have them.
Of course, every person’s risk tolerance is different and usually personal circumstances play an important role in these decisions. However, you would be required to buy them if you have a loan on the automobile. Also, you would be wise to buy them if you have a half decent car. You made an investment when you bought it and Collision and Comprehensive car insurance is there to protect that investment.
It is worth mentioning that you may not be able to save as much as you think you can by just going for a Liability Only policy since they are not as popular as full coverage and not all companies offer them. Instead, you may want to shop around for the best car insurance quotes and reduce costs to a more bearable level.
Another alternative is to increase deductibles and see if this would offer substantial relief so as not to need to give up the protection. Most companies offer large savings when you increase deductibles to a good level like $1,000. This way, you pay very low premiums and if something happens to your vehicle you still get decent compensation.
Take your time to look at your options properly before making a judgement. Get a few quotes with different levels of deductibles and for full and liability only coverage to see where things are at. You may be surprised with your findings.