Should I carry full coverage or liability only? This is a common auto insurance question (maybe the most common) that we field on a weekly, sometimes daily basis. There is no clear cut answer to this question and it truly is the decision of the car owner and client. This being said, we do our very best to put our clients in a position to make an educated decision regarding this matter. By educating our clients to the best of our ability they’re put in a better position to make this choice. Here are a few things we ask our clients to think about when considering what coverage to carry on their vehicles:
Do you currently have an outstanding loan for the vehicle? Car owners who currently have a loan on the vehicle in question may not have an option to drop full coverage. In most cases, the lender or lien holder will require the vehicle owner to carry full coverage insurance as a way to protect their interest in the vehicle. Many times when a client pays off their car loan, they will call us and inquire about dropping full coverage since it is no longer required by the lender, but this request brings us to our next question…
What is the value of the vehicle? We often times ask if the insured or potential client knows the value of the vehicle in question. Without knowing the value of the vehicle, it is impossible to make an educated decision about whether to carry full coverage insurance or not. In order to look up the value of the vehicle, we often times direct our clients to visit Kelley Blue Book. By doing this, someone can decide whether their car warrants full coverage. For instance, if the value of a vehicle is $2,000 and the difference between full coverage and liability only is $500 per year, a person may not find it a smart investment to carry full coverage being that in 4 years they could have just bought another vehicle. This doesn’t even take into consideration that a deductible will apply in the event of an at-fault accident, which could be another $500. All this said, find the value of your vehicle and weigh it against the associative costs of carrying full coverage to see what works best for you. There’s no clear cut answers as different people have different financial needs and strategies. For this reason, we provide our clients with the information but they have to make the final decision regarding their coverage.
In your opinion, is the vehicle worth fixing if involved in an accident? Although similar to the previous question, this question plays more into clients’ sentimental value in the vehicle and also the current state of the vehicle. There are old vehicles that are sometimes kept in tip-top shape with low mileage. Although on paper this may not be worth it to some people, many others would like to keep this vehicle for the remainder of its’ life and carry full coverage. Another example is with a vehicle that contains sentimental value. What if it was your very first car, and although it doesn’t hold much monetary value, you want it protected to pass to your kids? Then what?
These are all questions we ask clients to get the wheels turning and help them make an educated guess as to whether or not to carry full coverage. We hope this helps you decide your coverage needs in the future as well. As always, feel free to contact us for more information.