Deciding how much auto insurance you really need can be challenging. While it’s important to ensure you’re adequately protected if you have to file a claim, you don’t want to pay for unnecessary coverage. Therefore, it’s common to wonder if it makes sense to keep full coverage on a vehicle that’s been paid off or is no longer worth a great deal. Here are some guidelines you can use to help determine what’s best for your financial situation. 

Should You Downgrade Your Auto Insurance?

What Does Full Coverage Include?

Typically, full coverage refers to an auto insurance policy that includes collision and comprehensive coverage in addition to liability. Collision coverage is designed to take care of repairs for your own vehicle if you’re at fault in an accident, whether you hit another car or an object.

Comprehensive coverage, meanwhile, will pay for claims due to weather-related damages, theft, vandalism, fire, falling objects, or incidents involving an animal.

What Liability Covers 

Most states legally require drivers to carry a minimum amount of liability coverage. This portion of your policy only covers bodily injuries and property damage for the other party involved in any accidents you cause.

As such, if you sustain injuries or vehicle damage yourself, you’ll be responsible for paying medical and repair bills out of pocket if you don’t have full coverage. 

Factors to Consider Before Deciding 

If you still have a car loan or you’re leasing a vehicle, it’s likely that your lender will require you to have full coverage. However, if you own your vehicle, full coverage is optional.

Before deciding how much insurance you need, there are a few factors to take into account. First, think about whether you have the finances to get a new car if yours is totaled or stolen. If not, it’s probably best to keep collision and comprehensive coverage. Then consider if the area you live in is prone to flooding, hail storms, or vehicle thefts. If so, you could end up saving more by maintaining comprehensive coverage.

Finally, the age and value of your vehicle should also play a role in your decision. If you own your car long-term, there may come a point where it depreciates to the point where saving money on insurance premiums is the more frugal choice.

If you need help figuring out whether or not you should drop full coverage on your auto insurance, turn to Sun Valley Insurance in Indian Trail, NC, for professional advice. They’ll carefully assess your circumstances and assist you in securing the lowest available rate without compromising on the quality of your protection. Backed by 30 years of combined industry experience, their agents work hard to match each client with the products most suitable for their unique needs. Call (704) 282-1155 to schedule an insurance review or visit them online to learn more about the services they offer.