If your vehicle is currently being financed, you may not have a choice when it comes to whether or not you purchase collision auto insurance coverage. This is because it is commonplace for lenders to require borrowers to carry this type of auto insurance until which time they have successfully paid off their auto loan. However, if you own your vehicle outright, whether or not you wish to include collision insurance in your policy will be completely optional. Since adding collision insurance will inevitably result in higher monthly premiums, many people find themselves struggling to decide whether or not investing in this coverage is the right choice for them. If you have found yourself struggling to make this decision as well, taking the time to answer just a couple of questions can help you to make this very important decision.
How Much Is Your Vehicle Currently Worth?
One of the most important things for you to consider when deciding whether or not to purchase collision auto insurance is the current resale value of your vehicle. The reason that this is so important is that an auto insurance policy will not pay out a claim for damages that exceeds the current value of the vehicle at the time it is damaged. For example, if your vehicle is currently worth $5,000 and you get into an accident that results in $10,000 worth of damage to your vehicle, the insurance company is only going to pay the $5,000 and declare the vehicle a total loss rather than paying the full amount to repair the vehicle. Consequently, if your vehicle has a low resale value, choosing to purchase collision coverage may not be in your best interest. This is especially true in cases where the resale value of the vehicle does not greatly exceed the cost of any deductible that is associated with the policy. However, if your vehicle still has a relatively high resale value, choosing to purchase collision auto insurance can save you a ton of money if your vehicle is ever involved in an accident where you are personally liable.
Can You Afford To Repair Or Replace Your Vehicle If You Decline Coverage?
No matter how much your vehicle is worth, it is important to consider your own personal ability to afford to repair or replace this vehicle if it should become damaged in an accident. Even if your vehicle has a relatively low resale value, choosing to purchase collision insurance can prove beneficial as a short-term solution if you need some time to build up your savings in order to ensure you are able to purchase a new vehicle in the event your current vehicle is totaled. After all, if you are like most people, being without a vehicle for any length of time can have a huge impact on your quality of life and your ability to fulfill your responsibilities. Collision insurance can help to ensure you do not find yourself in this position even if you have minimal savings with which to purchase a new vehicle on your own.
Contact a local auto insurance provider to learn more.Share