Friday, 11 January 2013

Comprehensive and Collision Coverage: To Drop or Not to Drop!

Comprehensive and Collision Coverage: To Drop or Not to Drop!

By Bethany Collins

Today, carrying vehicle insurance on your car is mandated by law in every state. There's no way around that and there really shouldn't be. What is important, however, is that you know exactly what you're paying for; being very clear about what different coverage pay for and the benefits they provide. Now if you're looking to save some money, you might consider dropping some coverage. And almost instantly you find yourself wondering: "Should I drop comprehensive and collision?" Here's what you need to keep in mind about comprehensive and collision coverage.

What do you mean by collision coverage?

Collision coverage pays for damages caused to your vehicle if you hit another object. If you are to meet with a collision with another car, your collision coverage will kick in and pay to fix the damages irrespective of whose fault the accident was.

What do you mean by comprehensive coverage?

Comprehensive coverage pays for damages to your vehicle caused by bad weather conditions, theft, vandalism and riot.

Are comprehensive and liability legally required?

No, comprehensive and liability are not legally required. The most basic coverage required by law is liability. There are some states, however, that might require additional coverage, but comprehensive and liability is not one of them.

When can you NOT drop comprehensive and collision?

If you have an outstanding loan on your car, chances are your loan provider will require you to carry both comprehensive and collision coverage on the car. If you don't have an outstanding loan on your car, carrying comprehensive and collision coverage is a question of personal needs and choice.

When should you consider dropping comprehensive and collision?

If you own an older car: If you own a car that is older than 10 years, you might want to rethink paying for comprehensive coverage. The cost of coverage along with the deductible you pay could actually exceed the total value of the car, making it a less than feasible option. It would make sense, in such a case, to pay for the cost of repairs out of your own pocket and save money by skipping comprehensive coverage entirely. To find out the value of your vehicle, check out the Kelley Blue Book online value estimator. This will give you an estimate of what your vehicle is currently worth, so you can decide if it's worth it to buy comprehensive and liability coverage.

If you can afford to pay to fix the damages out of your pocket: Dropping collision and comprehensive coverage means that if at all you're involved in a collision or if you car is damaged by extreme weather conditions, you will have to pay for the damages out of your pocket. Think about whether you have enough money and can afford to pay for the damages before dropping collision and comprehensive.

If your car has been totaled once before: When your car has been totaled once, chances of your car insurance company paying fair compensation in the event of a claim are less because the vehicle is not viewed as valuable after being totaled once before.

Though comprehensive and collision coverages are not required by law, it is important that you weigh your pros and cons thoroughly before deciding to drop them.

Bethany Collins is a mother of two who works from home and lives with her husband. She is voracious reader and always looks out for happening topics related to personal finance. She specializes on subjects related to car insurance and uses her spare time to write on topics related to classic auto insurance and auto insurance cost etc.

Article Source: http://EzineArticles.com/?expert=Bethany_Collins
http://EzineArticles.com/?Comprehensive-and-Collision-Coverage:-To-Drop-or-Not-to-Drop!&id=7456233

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