Drop Collision Insurance
collision insurance
I'm top insurance attorney today we're going to talk about when can we finally drop that collision insurance.
we have on our car we all need liability insurance that protects us from damage
we do to others or their property but this isn't necessarily true for collision and comprehensive car insurance
those coverages cover repairs or replacement of your car
if you're an accident that's your fault or losses caused by theft vandalism and natural disasters the reason these aren't always needed is because the potential benefit may not be worth
the premium you're paying compared with the actual risk
the biggest question to ask would the amount paid by your insurance company really helped you after you've paid your deductible or would it be better to drop the coverage altogether and save that money as a rainy day
collision or theft fund consider the actual replacement cost value of your car you can do this pretty easily through the NAD
a guides kelley blue book or the black book be realistic look at the condition of your vehicle including the dents
the sun damaged the upholstery and the mileage or you can call your insurance company see how their claims department determines the actual cash value in your area a good way to decide whether or not you need collision insurance is to look at the policy or look at the Blue Book value determine the value of the car subtract the deductible on
Vehicle replacement
the policy from the vehicle replacement cost the remaining amount would be the actual benefit of carrying that coverage now consider the annual premium you pay
you got to divide this number by the actual benefit of the policy they would take before the total premiums paid would surpass the actual replacement cost of the vehicle
that's a lot of gobbledygook but here's a simple example for a $15,000 actual benefit for a loss that had an annual collision premium of $100 the result would be 50 years so now consider the likelihood of you getting into an accident for our example
the likelihood of getting into an accident over the course of 50 years would be fairly high so you'd want to keep the coverage but for a car whose actual benefit is 700 the likelihood of you getting in an accident within seven years might not be so high
you also want to consider other factors that will affect the likelihood of you getting into an accident for example have a long commute the chances of getting into an accident are greater for someone who drives a few miles to work every day as opposed to someone who has a long-distance drive
Settlement from the insurance company
the older you get the more comfortable you are with driving you become more responsible and you learn to be a defensive driver
in this case your accident rate will decrease until you hit the tender age of 80
another good rule of thumb is the older your car gets the less likely you are to need collision insurance you might be better off saving that money for a new car
really think about how much you could afford out-of-pocket if you're living paycheck-to-paycheck a settlement from the insurance company may be exactly what you need to replace your vehicle however if you have savings and are making a comfortable living you may not be afraid of making a down payment if your car was totaled just call us