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In an effort to save money, you might decide it’s time to look for ways to reduce some of your bills. While doing this, your auto insurance is likely to come into question if you have full coverage. When you have full coverage insurance, you’re not only protected from liability but also in situations that require comprehensive and collision coverage. This is why it’s important to carefully consider what dropping this portion of your policy would mean.

The insurance specialists at Fritch Insurance in Beatrice, NE, recommend asking yourself the following questions before making a decision on whether or not you can afford to let go of full coverage:

Is My Car Financed?

One of the first things to consider is if you have an outstanding loan on your vehicle. If so, there’s a good chance the lien holder will require that you maintain comprehensive and collision coverage as long as you’re making payments on the loan. Since the car is their asset, they will want to mitigate as much risk as possible.

Do I Have the Means to Pay for Repairs or a Replacement Myself?

full coverage insuranceNext, you must realize that without full coverage insurance, you will be responsible for paying completely out of pocket to repair or replace your car if it incurs damages from an accident that was your fault. If you don’t have the financial means to pay for a significant repair or buy a new vehicle if you experience a total loss, you may want to keep full coverage.

What Is the Value of My Car Compared to My Full Coverage Costs?

If your car is older, it might make more sense just to keep liability coverage on it. To figure this out, evaluate how much you spend annually on comprehensive and collision coverage compared to the actual cash value of your vehicle. If the total equals more than 10% of the car’s value, full coverage is probably not necessary.

If you are thinking about eliminating full coverage insurance from your expenses, it’s essential to thoroughly weigh out the pros and cons because this decision could have a large impact on your financial future. To get sound advice from a knowledgeable agent at Fritch Insurance, call (402) 223-3312. You can also visit them online for a full list of services.

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