Accident insurance will pay to repair or replace your car in the subject matter at-fault accidents for your deductible. collision coverage will also pay if your car breaks down when exposed to an uninsured driver or underinsured driver. The purpose of this coverage is to protect your assets.
Typical reasons to buy this coverage are:
- Your vehicle is guaranteed for the loan.
- Your vehicle is paid for but still had a fair value.
- Your driving record show accidents causing possible damage.
Reasons to Drop Collision Coverage
The main reason for dropping the collision coverage on your car is when it is no longer worthwhile for you. To determine the value of collision coverage, consider the value of your car versus the cost of your insurance. For example, if your car is not guaranteed and actual cash value $ 2,500, but your collision coverage costs $ 250 per six months or $ 500 per year, the cost of insurance is 20% of the value. You then add back the chances of your deductible $ 500, and your adjusted cost of insurance to 25%. Add to the mix that even cheap car insurance in Texas typically increases from year to year due to find car parts for older model vehicles become more expensive as they age.Now that you have determined the cost of collision coverage, there are personal considerations you need to think about.
The main reason for dropping the collision coverage on your car is when it is no longer worthwhile for you. To determine the value of collision coverage, consider the value of your car versus the cost of your insurance. For example, if your car is not guaranteed and actual cash value $ 2,500, but your collision coverage costs $ 250 per six months or $ 500 per year, the cost of insurance is 20% of the value. You then add back the chances of your deductible $ 500, and your adjusted cost of insurance to 25%. Add to the mix that even cheap car insurance in Texas typically increases from year to year due to find car parts for older model vehicles become more expensive as they age.Now that you have determined the cost of collision coverage, there are personal considerations you need to think about.
- Can you afford to buy a replacement vehicle if your car is a total loss after an accident at-fault or car you reach by an uninsured driver?
- Is it not possible that you would be in at-fault accidents during the next few years?
- Do you drive your car less than the national average of 12,000 miles per year?
- Can you afford to lose your rental reimbursement coverage, which typically is not available unless you carry collision coverage? Remember, you may need to rent a car while you are shopping for a replacement or your car is under repair.
If you answered "yes" to any of the above mentioned, it might make
better sense to not carry collision coverage on the model of the vehicle
you are paid for the older ones.
Risk management
Texas car insurance customers should keep in mind that a lot of drivers who carry collision coverage to make this purchase based on RISK that something might happen. Insurance is about the financial risk that an event may or may not occur and should be considered as such.If your insurance rates more affordable, then it is likely time to shop for coverage or reduce the value of coverage you pay for. Also, it is important to note that increasing your deductible on older vehicles adds to the cost of insurance rather than reducing it.Using the example above to $ 2,500 a vehicle, insurance costs will usually be reduced from $ 250 per six-month to $ 200 for a $ 1,000 deductible, which translates to $ 400 per year. So, if your vehicle reaches $ 2,500, you will receive only $ 1,500 of coverage. With insurance costs of $ 400 per year, the actual cost of your insurance for vehicles increased to 27% or 2% more than the example used above.
Broker call you
If you are interested in reducing the cost of your car insurance by dropping collision coverage, call your insurance broker and discuss "what if" to determine whether reducing coverage make financial sense. A good broker will always put your needs before their commission, and do everything possible to satisfy you and maintain their relationship with you.
Risk management
Texas car insurance customers should keep in mind that a lot of drivers who carry collision coverage to make this purchase based on RISK that something might happen. Insurance is about the financial risk that an event may or may not occur and should be considered as such.If your insurance rates more affordable, then it is likely time to shop for coverage or reduce the value of coverage you pay for. Also, it is important to note that increasing your deductible on older vehicles adds to the cost of insurance rather than reducing it.Using the example above to $ 2,500 a vehicle, insurance costs will usually be reduced from $ 250 per six-month to $ 200 for a $ 1,000 deductible, which translates to $ 400 per year. So, if your vehicle reaches $ 2,500, you will receive only $ 1,500 of coverage. With insurance costs of $ 400 per year, the actual cost of your insurance for vehicles increased to 27% or 2% more than the example used above.
Broker call you
If you are interested in reducing the cost of your car insurance by dropping collision coverage, call your insurance broker and discuss "what if" to determine whether reducing coverage make financial sense. A good broker will always put your needs before their commission, and do everything possible to satisfy you and maintain their relationship with you.
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