Recently, a client asked, “shouldn’t I drop my coverage to liability only now that my cars paid off?”
The short answer, “not necessarily.”
Often when you opt for liability only it means the following:
- In some cases you lose roadside coverage.
- You have no glass coverage.
- You will not have access to a covered rental car following an accident.
- No coverage to repair your vehicle (or total loss settlement) if you hit a deer, have hail damage, tree falls on the car, etc.
- No coverage to repair your vehicle (or total loss settlement) if you collide with another vehicle or stationary object, etc.
Often, clients think, since my car is paid off, I do not need full coverage.
Even a “used” car would have some sort of settlement, you can determine this approximate value by visiting auto trader, entering the year, make, model, milage, condition, to get a sense of the retail value. Any settlement is a settlement, which can then be used towards the purchase of another vehicle.
Then you must consider the math. How much will you save switching from “full coverage” to “liability only.”
Let us assume you save $20 monthly, and the value of your used car is $5,000. This means it would take 20 years claim free for the savings to outweigh carrying the coverage. Yes, the value of the car depreciates over time, so this is a very simple tool and not 100% accurate, but the point is, often, the savings does not always outweigh the benefits!
Considering going to liability only insurance? Give us a call 804-320-0129 or email us at myagent@kmicoverage.com. Talking through scenarios like these with your agent just might be the clarity you need to help make the best decision for you and your wallet!