Do You Need Collision And Comprehensive Insurance? Premiums

Collision and Comprehensive insurance are optional automobile insurance coverages. If you still have a lien against your vehicle, the agreement you have with your lender will force you to carry these coverage types. If you have paid off your car, you can decide to keep or drop these aspects of your policy. You can cut your auto insurance premiums if you remove or lower these parts of your insurance policy's protection.

Collision insurance can pay for the cost to replace your automobile when your insured auto hits or is hit by another car. It can also pay for the cost to repair your car when a covered automobile hits a something other than a automobile such as a Jersey barrier.

Comprehensive insurance is also known as "Other than Collision." This type of coverage pays for damages caused by flood, vandalism, contact with birds or animals, etc..

Since both collision insurance and comprehensive insurance compensate you for damage to your car and not someone else's, you are allowed to decide whether or not to drop these from your policy. However, if your vehicle is leased, or you have a lien on your vehicle, you probably will not be able to do so because the actual owner of the vehicle or the lender will want their interests protected.

The liability portion of your automobile insurance policy is the primary aspect of the policy that pays others for their damages. If you collide with another auto and you don't have collision insurance, that fact will not impact the amount of money the other party might get.

Why Should You Eliminate Collision Insurance?

The costs for this aspect of your auto insurance coverage may be more than you want to pay. If your auto is totaled, the insurance company will only pay you its book value. At some point, you may feel that the potential return has been reduced enough that the cost of the collision insurance is no longer justified by the potential payment you might get from your insurance company. If you own your automobile free and clear you can contact your insurer and drop or reduce the coverage.

You can reduce your collision coverage by raising the deductible. This will slash therates and still give you some protection. Your lien holder or leaser may allow you to raise the deductible up to a specified limit.

Why Should You Drop Comprehensive Insurance?

The logic behind removing or reducing automobile comprehensive insurance is the same as the thinking associated with cutting collision insurance. However, since the cost for comprehensive insurance is less than the cost of collision insurance, you may want to keep it even after you have dropped your collision coverage.

If your automobile is leased or you have a lien on it, you may not be able to drop the coverage. However the leaser or bank or lender may allow you to reduce the coverage by raising your deductible. This will reduce your Costs, although not as much as completely cutting the coverage would.

Most cars lose value as they get older. This reduces the amount of money that an insurance company is likely to pay to repair or replace a car. At some point you may feel that the amount of premium your auto's collision or comprehensive coverage adds to your auto insurance bill is too much. Exactly when that point comes is determined by your personal comfort level with risk.

Dropping comprehensive insurance coverage and/or collision coverage means that you take more risk. If your feel that you are unlikely to have an at fault accident since you drive safely you may feel that you can take this risk. If you garage your automobile your vehicle is perhaps less likely to be stolen or vandalized. If this is the case, you may want to drop the coverage.