As your vehicle ages, you may be wondering if it’s necessary to continue carrying the same amount of car insurance you purchased when it was newer. In some cases, dropping extra coverage can be a smart way to save money. However, before doing so, it’s important to understand what your financial responsibilities will be in the event your vehicle is damaged or stolen. The following information will help you determine the best solution for your particular situation. 

What Is Full Coverage?

The majority of states legally require drivers to purchase liability coverage. This will pay for any third-party injuries and property damage that occur due to an accident you cause. It will also cover your legal fees if you’re sued, but it won’t provide reimbursement for your own injuries or car repairs. Full coverage is the term used to describe policies that include collision and comprehensive insurance in addition to liability. These will pay for the losses you incur yourself from hitting another vehicle or object, fire, inclement weather, falling objects, theft, vandalism, and animal impacts.

What Are Factors to Consider? 

Before reaching a conclusion about your need for full coverage car insurance, there are different variables to take into account. First, if you loan or lease your vehicle, your lender is likely to limit their risk by requiring you to have collision and comprehensive. As such, you won’t have the option of dropping down to just liability. Also, consider if having your car totaled or stolen would put you in a challenging financial position. You may want to keep the additional protection if you don’t have the means to invest in a replacement. 

What Is the 10% Rule?

Another factor to think about is the value of your vehicle. As a general rule of thumb, it might make sense to get rid of full coverage if your annual cost for insurance is more than 10% of the actual cash value of the car. For instance, if your vehicle is valued at $3,000 and your deductible is $500, you would receive a maximum payout of $2,500 for a total loss claim. If your yearly premium is over $250, it might not be worth it. However, you must keep in mind you’ll have to pay out of pocket should something happen.  

Deciding whether or not to keep full coverage on your vehicle can be difficult, but fortunately, the professionals at Farm Bureau Insurance in Blountstown, FL, are available to help ensure you remain adequately protected. They’ll assess your unique circumstances and explain which products will offer you the most financial security. Backed by more than 60 years of industry experience, they’ve been entrusted to provide countless residents with reliable products at affordable rates. Call (850) 674-5471 to set up an appointment or visit them online to request a quote.