Have you ever pondered whether your vehicle justifies having comprehensive and collision coverage?
Whether to buy the more expensive coverage can depend on many factors, such as the car’s value, its age, and your personal risk tolerance. Let’s take a look at what comprehensive and collision coverage are and how you can determine if it’s worth having for your car.
Comprehensive and collision coverage are two types of optional insurance that together protect your vehicle from damage caused by a collision with another vehicle or object and weather-related damage. Comprehensive coverage provides protection for events beyond your control, such as theft, fire, vandalism, and flooding. Collision coverage pays for repairs to your car if you’re in an accident with another vehicle or object.
To determine if the car is worth having comprehensive and collision insurance consider the cost of insuring it versus its value. The best way to think about is how easily is the car replaceable to you.
You should also take into account depreciation, meaning the car is dropping in value over time. It might not make sense to buy collision coverage if its value has dropped below your deductible. Generally if the car is 10 years old it's time to think about dropping your coverage to liability.
If you decide that comprehensive and collision coverage isn’t for you, because of either the cost or the car's value then you should still purchase liability insurance. Liability coverage is the minimum required in most states, and it pays for damages to another person’s car or property if you’re found at fault in an accident.
You have a lienholder on your car
If your vehicle is financed — and most new cars are — you’ll likely have a lienholder listed on your title. In this situation, the lender has a financial interest in the car until it’s fully paid off. This means that if your car is damaged or destroyed, they may require you to carry comprehensive coverage for the duration of your loan/lease term. Even after you pay off the car it is wise to keep comprehensive and collision insurance because in most cases your car still has a significant value, and you'll want to protect it.
Does your car’s age factor into the equation?
Yes! As cars get older, their value decreases making comprehensive and collision coverage less of a necessity. For instance, if you have an older car with a low market value (under $1000) but are still paying for comprehensive and collision coverage you are probably wasting money on the insurance.
However, you need to make sure that your liability coverage is still up-to-date to protect you in case of an accident. Liability insurance pays for damages and medical bills if you are at fault in an accident — it doesn’t cover repairs to your vehicle.
You have a high mileage vehicle
If your vehicle has accumulated a significant number of miles, it may be prudent to consider eliminating comprehensive and collision coverage. Older or high-mileage cars often incur repair costs that surpass their actual value due to natural wear and tear over time. In the unfortunate event of an accident, the expenses for repairs could exceed the worth of your vehicle, prompting the insurance company to declare it a total loss and provide compensation for its book value, minus your deductible.
Your vehicle has already existing damage
If your car already has existing damage and you don't owe any money on it, dropping comprehensive and collision coverage may be a viable option. In such cases, the insurance company will not cover the pre-existing damage in case of an accident.
To determine whether getting comprehensive and collision coverage for your car is suitable, consider all the factors mentioned above and assess whether you can afford the insurance premium.
You car has a salvage title
If your vehicle has a salvage title, it means it has been previously deemed a total loss by the insurance company. Even if it has been repaired, obtaining comprehensive coverage can be challenging and costly. In such cases, opting for liability coverage alone might be more economical, provided you have the means to repair or replace the vehicle independently in the event of any mishap.
While comprehensive and collision coverage can help safeguard your car against accidents or damage, it is crucial to evaluate whether the associated expenses are justified based on your specific circumstances.
Can you buy a car with only liability insurance?
If you own your car outright and have no outstanding loans, you can opt for liability insurance. There are some instances where a dealership-financed vehicle (such as buy here-pay here lots) may offer loan protection coverage through a third party to cover your vehicle loan in case of damage. If you choose to purchase this coverage from the dealership, you will still need to obtain liability insurance for your car in order to legally drive on the road.
We suggest comparing your insurance coverage to determine if it is the optimal solution for you.
Whether you need liability only or comprehensive and collision coverage, we are the ideal choice to offer you an affordable insurance quote.
For fast and free quotes you can us at 816.453.7722 or request a quote below.