Why Reduce Coverage on Old Cars

When you’re looking for auto insurance savings tips online, you’ll see one tip that gets repeated over and over again: if you own an older car, then you should reduce your insurance coverage. Many people know about this tip, but not everybody knows why or how to reduce insurance coverage on an older car. Find out why reduce coverage and how to save thousands of dollars per year. Get online auto insurance quotes from our website, too.

When we talk about “car insurance”, we’re not talking about one single insurance policy. We’re talking about a group of five or so different insurance policies. Among them, collision and comprehensive coverage are the most expensive. Furthermore, both policies require deductibles to be paid before the insurer takes action. If you still finance your car, it is likely your lienholder will require to purchase one or both policies. After you have finished paying for your car, you are no longer legally required to keep comprehensive and collision active (there are few exceptions).

If you drive an older vehicle, then you may be paying more for your insurance policy than your car is truly worth. That means you’re paying more for your insurance policy than you would likely receive in the event of a collision. You should check if the current market value of the car is at least 10 times the premium you pay for collision or comprehensive. If it’s not, you should consider dropping. Or, at least, reduce it. By dropping comprehensive and collision insurance from your plan, you can save hundreds of dollars per year. Some people will even save thousands.

Use Blue Book or a local vehicle resale website to determine the value of your vehicle. This will help you understand when it is the time to drop coverage.

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