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Are Collision & Comprehensive Coverage Necessary?

December 13, 2011

Auto insurance is an unavoidable cost of owning a vehicle. In order to drive a vehicle, you must, by law, have insurance. However, there are ways that you can save on your insurance premiums. The easiest is to shop around for insurance to compare the rates across different insurance companies and receive the lowest available rate based on your driving profile. Another option that many people may consider is to remove comprehensive and/or collision coverage, especially for older cars.

Collision coverage is for damages to your own vehicle in the event of a car accident. If you own an older vehicle, then you may feel that it’s not worth the extra cost yearly to compensate you for vehicle repairs. There really isn’t a set benchmark for when collision coverage is not needed. You should do your research and understand the costs that you could pay to repair your vehicle if you’re involved in a car accident – and compare it against the yearly cost of collision coverage.

Comprehensive coverage will cover damage for certain perils, such as vandalism and falling or flying objects. You may want to look at costs to repair a windshield for example and compare the cost to yearly comprehensive coverage.

By comparing a potential loss with the cost of the coverage, you’re able to make a more informed decision on whether collision or comprehensive coverage is worth purchasing for an older car.

There is an exception that is important to consider. If you are hit by an unidentified third party, also known as a hit-and-run, then coverage for damage would come from the collision premiums. It doesn’t matter if you were not at fault. A few hundred dollars per year may be significant, but you need to make the decision to bear the additional risk associated with the savings. Bookmark this site.

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