Buzz
Car insurance is essential, but there are various coverage options to consider. Depending on your car's current value, you might want to reconsider paying for collision and comprehensive insurance, according to Credit.com.
Collision insurance, as the name implies, covers your vehicle in the event of an accident. On the other hand, comprehensive insurance covers non-collision incidents, like theft or vandalism.
Credit.com highlights that many people waste money on unnecessary coverage in a post about financial mistakes:
...many individuals continue paying for collision and comprehensive insurance on their aging vehicles long after it's worthwhile. Remember, you'll only receive the car's value minus the deductible after an accident or theft. If your car is worth just $3,000, spending $400 annually on collision and comprehensive coverage isn't cost-effective. A general guideline:
When your yearly premium surpasses 10% of the car's value, it's time to cancel it."
Of course, this is only one general guideline. About.com offers another suggestion:
According to another rule of thumb, if collision coverage costs you 25% of your car's value every six months, it might be time to stop paying for it.
Consider that in two years, you could save enough to cover the cost of replacing your vehicle if it's totaled.
You'll need to balance the cost and savings with the risk of going without this coverage. If you're leasing your car, skipping collision insurance may not even be an option.
However, if you own your car and its value is relatively low, it's worth questioning whether the annual premium is justified. Be sure to check out the full post for more information.
Photo by Vetatur Fumare.
