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Full coverage auto insurance provides owners peace of mind from many potential risks, including accidents and thefts. It guarantees that vehicle owners are not financially burdened when unexpected damage or loss happens. However, vehicle owners may wonder when the right time to consider dropping full coverage auto insurance is.

What Is Full Coverage Auto Insurance?

This comprehensive coverage is a protection plan that typically includes multiple coverage types. One thing you should know is that there is no auto policy called “full coverage auto insurance.” When an insurance company uses the term, they often refer to creating a comprehensive car insurance package that provides clients coverage for various circumstances.

The Best Times to Drop Car Insurance

When the Vehicle’s Value Has Significantly Depreciated

As a car ages, its market value can decrease. If the cost of repairing or replacing the vehicle after an accident exceeds the car’s market value, it might no longer be financially wise to pay for full coverage. In these cases, the premium savings from dropping full coverage can be used to fund repairs or a replacement vehicle.

When the Annual Premium Exceeds 10% of the Vehicle’s Value

A general rule of thumb is if the annual cost of a full coverage insurance policy is more than 10% of the car’s value, you may need to reconsider maintaining this level of coverage. For example, dropping this coverage could lead to better cost savings without proportionate benefits if your car is worth $5,000 and you are paying more than $500 annually for full coverage.

When the Vehicle Is Paid Off

Auto insurance providers often need a full coverage policy if you have a car loan to protect their investment. Once you pay off the car, this requirement no longer exists. At this point, you can decide to lower coverage if maintaining full coverage is no longer cost-effective or necessary for an older vehicle.

When You Have a Robust Emergency Fund

If you are financially stable and have substantial emergency savings funds, you might feel comfortable shouldering future repair or replacement costs out of pocket. Dropping full coverage insurance can save money on premium prices while giving you financial security in the event of an accident.

When the Cost of Full Coverage Is a Financial Strain

If maintaining full coverage is straining your finances, it may be best to allocate your funds toward important living expenses or savings. Reducing your insurance coverage can relieve financial pressure, especially if the vehicle is older and not worth extensive coverage.

When the Vehicle Is Only Used Occasionally

If you have a secondary vehicle you rarely use, the risk of accidents or damage is considerably lower. Reassessing the need for full coverage on unused vehicles may show that a basic liability insurance policy is more appropriate and cost-effective.

Types of Car Insurance

Liability Insurance

Liability insurance is often mandated by law and covers the costs of injuries and property damage the insured driver may have caused to others in an accident. This includes bodily injury liability, which pays for medical bills, lost wages and legal fees if you’re sued. You also have property damage liability that covers costs to repair or replace the other party’s vehicle or property.

Collision Insurance

Collision coverage can pay for repairing or replacing your vehicle if it’s damaged in a collision, regardless of who is at fault. Collision insurance benefits newer or more expensive vehicles, ensuring you won’t have to pay with your own money for expensive repairs.

Comprehensive Insurance

Comprehensive insurance covers a wide range of non-collision-related damages to your vehicle. This includes theft, bodily injury, man-made or natural disasters, falling objects or animal collisions. Essentially, it protects your vehicle from damages beyond your control.

Additional Coverages

Apart from these core components, this comprehensive insurance can also include additional protections:

Who Can Be Covered for a Single Car Insurance

When purchasing an auto insurance policy, understanding who can be covered is crucial. Generally, a standard auto insurance policy can cover multiple people, extending beyond just the policyholder. Here are the groups and individuals commonly covered:

Drive Safer and Better With a Full-Coverage Car Insurance

There’s no better feeling than driving, knowing you don’t have to worry about sudden expenses when you get into unfortunate accidents on the road. But not everyone will forever need full-coverage car insurance, and that’s why they would cancel their coverage for numerous reasons. Whether it’s the owner not being able to drive anymore or they have a tough time paying the insurance, it’s the policyholder’s discretion to stop paying for their auto insurance.

If your vehicle still doesn’t have insurance and you plan on getting one, you can turn to Jaguar Insurance. Our 50 combined years of experience can help you understand everything about auto insurance and even find the right coverage that suits your needs. Request a callback today to talk to our agents.

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