FRIDAY, NOVEMBER 13, 2020
Full coverage car insurance is recommended for most vehicles and drivers, but it isn’t always necessary. There are times where you may want to lower your coverage or drop full coverage completely to only carry the liability required by your state.
You should be careful about when you drop your insurance, however. Dropping your full coverage too early can leave gaps in your insurance when it comes to an accident, so make sure that you are making the best decision for your vehicle.
Insurance When You Have a Lender
If you have a loan on your vehicle, you may be required to carry enough car insurance to cover the loan. This typically includes full coverage auto insurance. Until you pay off your vehicle, you may not have the option to drop full coverage on your car.
However, once your vehicle is paid off, you may be able to change your coverage. Once you have fully purchased the vehicle and the lender no longer has financial stake in your car, you are free to choose your insurance limits as long as you carry the minimum amount required by your state’s laws. It is not recommended that you immediately drop to liability after paying off a car, however.
This recommendation does not come from insurance agents who want you to pay more for full coverage. Rather, full coverage is recommended because it affords you the most protection possible for your vehicle. Liability insurance on its own does not cover any damages to your vehicle or injuries you may sustain in an accident.
Insurance When the Value of Your Car Drops
The one instance where full coverage isn’t generally recommended is when the value of your car is less than the cost of insuring it. If you would be paying more in car insurance than you would to completely replace the vehicle out of pocket, you may want to just save money by only having minimum liability.
If your vehicle still has value, however, consider trying to save money on a full coverage auto insurance policy. You can save money without lowering coverage by asking about insurance discounts you may qualify for, bundling your home and auto insurance policies, building your credit and more.
Before changing your coverage, be sure to speak with your insurance agent to discuss the best decision for you, your budget and your vehicle.
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