You May Be Able to Drop Full Coverage Auto Insurance and Have Liability Only to Save Money
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You May Be Able to Drop Full Coverage Auto Insurance and Have Liability Only to Save Money

If your car is old and not worth much, you may want to drop Collision and comprehensive Coverage from your insurance policy and stick to the state minimum liability coverage

May 10, 2021

Do you want to save money on car insurance? You can save money by dropping full coverage and having comprehensive or liability coverage only. But changing your insurance without doing your homework is risky. Even if your car isn't worth much, there may be good reasons why you need more coverage. But if you don't need full coverage, check to see how much money you can save by reducing your coverage.

What is liability Coverage Auto Insurance?

Liability insurance coverage, sometimes called 'third party' coverage, protects other people and their property if you are responsible for a collision. You can think of liability coverage as paying out for damages caused to everyone else, but not to you, to your passengers, or for your vehicle. If you only have liability coverage, you are financially responsible for damages to your vehicle and for everyone in your vehicle.

Liability coverage is required in North Carolina in order to operate a vehicle.

What is comprehensive Coverage Auto Insurance?

Comprehensive insurance, sometimes called 'other than collision' coverage, protects your for damages that are not caused by a collision, which include fires, theft, vandalism, cracked windshields, animals, and weather. Comprehensive coverage protects you for events that are out of your control, sometimes referred to as 'acts of God.' Comprehensive claims do not affect your insurance premiums in North Carolina.

What is collision Coverage Auto Insurance?

Collision coverage protects you financially for your own damages regardless of who is responsible for the damages. If you cause a collision, you can file a collision claim to repair your vehicle. You can also file a collision claim if you strike an object in the road, if you damage your wheels, or if fault for a collision cannot be determined by the investigating police agency. Collision claims do affect your insurance premiums in North Carolina.

What is Full Coverage Auto Insurance?

Despite the name, full coverage insurance doesn't protect you against every possible thing that could happen. Full coverage means that you have a variety of insurance coverage that will protect you in most situations. Full coverage means you have liability coverage, comprehensive coverage, and collision coverage.

Most finance companies require full coverage for as long as the vehicle is financed. Doing so protects the finance company should you be responsible for damages. If you have an auto loan and file a claim, the money might be paid out to the finance company instead of you.

Changing auto insurance Coverage Is Always a trade off

Whenever you increase your deductible or remove certain types of coverage altogether, you are increasing your risk should you suffer damages. The more auto insurance coverage you have, the less risk you have. The trade off, though, is that you'll end up spending more money to have less risk. That's how insurance works.

Use Your Car's Value To Determine if you need full coverage

Generally, if you own a vehicle that is worth a lot of money, you should have full coverage. If your vehicle isn't worth much, you might consider comprehensive or liability coverage only to save money. Why spend $500 extra per year to fully insure a vehicle that's only worth $700?

It really all comes down to how much money you can save and how much risk you want to assume. Of course, if you are a risky driver, full coverage will cost much more than if you are a safer driver. If you are not required to have full coverage, check with your current insurance company to get quotes on reducing or eliminating collision and comprehensive coverage. Once you get those quotes, shop around with other insurance companies to see which will give you the best deal. Don't assume you won't find a better deal just because another company was more expensive with full coverage. The other companies might beat your current insurer with less coverage.

Must Maintain state minimum auto insurance coverage

You must maintain at least comprehensive insurance in North Carolina or your license plate and ability to drive will be affected. Driving without auto insurance in North Carolina is a misdemeanor crime. North Carolina requires:

  • $30,000 bodily injury comprehensive auto insurance, per person per accident
  • $60,000 of bodily injury comprehensive auto insurance total per accident
  • $25,000 of property damage comprehensive auto insurance, per accident

Talk to your insurance agent about ways to save

Whatever decision you ultimately make, understand the risks involved with your decision and always seek out help from your insurance agent. Your insurance agent can offer you specific guidance for your situation, such as whether you are meeting state minimums or if you need certain coverage for other reasons. Your agent can also offer you other ways to save, such as dropping towing, transportation and other add-ons. You might even be able to save a lot of money by changing your deductibles around. If you are a safe driver and want to take a risk, you can raise your collision deductible. If you find yourself frequently replacing windshields, lowering your comprehensive deductible, while costing more in a premium, can save you more money in the long run.

Talk to your finance company before making changes

Many people get in trouble when they don't carry full coverage on vehicles that have an active loan. If you have an auto loan, you probably need full coverage insurance to keep your loan and car.

Before you make any changes to your insurance policy, contact your finance company to see which types of coverage are required. If you drop certain coverage that the finance company requires, you could lose your car or find that your finance company has signed you up for very expensive insurance to bring you into compliance.

Want to Save Money On Auto Insurance?

Are you looking for other ways to save money on your auto insurance but aren't ready to drop full coverage? We have some helpful information on how to save money on auto insurance.