Comprehensive and Collision Coverage on an Older Car
Today’s economy warrants a deeper consideration of the pros and cons of having comprehensive and collision coverage for your older car. Use the criteria below before you decide what kind of an auto insurance policy you’ll purchase for your car.
Determine whether you have the option to choose to have comprehensive and collision insurance. There are certain situations where this type of auto insurance coverage will not be an option including both cases of when you’ll have to have the coverage, as in cases when you’re financing your vehicle, and cases where you won’t be able to have the coverage because of the cost of such coverage for your vehicle.
Determine what your insurance company considers “totaled” for a vehicle before carrying comprehensive and collision coverage.
The cost of the insurance coverage may not be worth it on vehicles with low book value because depending on the car insurer, a totaled vehicle is usually based on 70 to 75 percent of the book value of your car. Therefore, if your car has a book value of $1,500 and you incur damage exceeding $1,050, chances are your vehicle will be considered totaled for insurance purposes which means that you’ll receive maximum $1,500 less your deductible towards the purchase of your next vehicle.
If comprehensive and collision is very expensive for your vehicle then the benefit of being eligible for $1,500 less your deductible in the event your car is totaled to use towards the purchase price of a new vehicle may not be worth it to you.
In the event you have an older car that is not worth much, consider the impact of the deductible that you choose. For instance, if your car’s book value is $1,500 and you choose a $1,000 deductible then the most your policy will pay you for your totaled vehicle is $500. Because comprehensive and collision auto coverage can be expensive, you’ll have to decide whether you’re better off simply setting aside that sum of money for a future car purchase and choosing liability insurance instead.
After an accident you’ll still need to get around and having comprehensive and collision auto insurance gives you the opportunity to also have rental reimbursement for renting a car while yours is out of commission. Usually rental reimbursement is a separate auto insurance option that you’ll have to specifically ask to have included in your auto policy, it does not automatically come with comprehensive and collision coverage but is an option that’s only available to those individuals who have comprehensive and collision coverage.
If you frequently rent cars for longer trips to preserve the life of your older vehicle, your comprehensive and collision coverage will likely save you extra fees charged by rental car agencies that require you to have comprehensive and collision coverage.
If you drive an older car, there are many considerations that go into choosing whether to pay more to have comprehensive and collision coverage on your auto policy. Use the suggestions above to make the right financial decision for your situation when it comes to comprehensive and collision auto insurance coverage.