Believe it or not, there is logic to insurance – buy as much of it as you need to be protected well. That’s confusing enough, so let’s put it simply: Maybe. You need at least your state’s minimum insurance coverage plus you should consider additional coverage if you can afford it, or if you can’t not afford to have it? Is that clear?
When you’ve got full coverage, your insurer will only pay you the actual cash value of your car, or what it’s worth, in the event of an accident that condemns your car. At some time or another, the value of your car will have declined to a point where it’s no longer economically feasible to keep the insurance coverage. It’s a good idea to periodically determine your car’s worth to figure out if you’re paying more for the possibility of a reduced return.
Remember that insurance premiums and deductibles have an inverse relationship. If you decide to keep your collision insurance, consider increasing the deductible to an “affordable” amount so that your premiums will be lower. At some point, what you spend on insurance (premiums plus deductible) is going to be all that you get back (if you’re lucky). If you’ve reached that place, it’s time to rethink the collision.
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