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Do you need Collision and Comprehensive Insurance? Costs

Written by: Alston Balkcom

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

Do you need Collision and Comprehensive Insurance? Costs

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

Collision insurance can pay for your auto 's damages when your insured vehicle hits or is hit by another auto. It can also pay for the cost to repair your car when your insured automobile hits a fixed object such as a tree.

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

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

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

Why Should You Drop Collision Insurance?

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

You can reduce your collision coverage by raising the deductible. This will reduce thepremiums 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 thinking behind eliminating or reducing car comprehensive insurance is the same as the logic associated with eliminating 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 lien holder may allow you to reduce the coverage by raising your deductible. This will reduce your premiums, although not as much as completely removing the coverage would.

Most cars lose value when they get older. This reduces the amount of money that an insurance company is likely to pay to repair or replace a auto. At some point you may feel that the amount of premium your car'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 this may make sense for you. If you garage your automobile your automobile is perhaps less likely to be stolen or vandalized. If this is the case, you may want to take these risks as well.

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Article Tags: amount of money, animals, auto insurance coverages, auto insurance policy, automobile, birds, car insurance premiums, collision insurance, comprehensive insurance, coverage types, damages, flood, insurance, insurance company, lien holder, nbsp, optional auto insurance, vandalism
Referred by: http://www.searchengineworkshops.com



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