When Should You Downgrade Your Car Insurance
After some time, you may find out that the car coverage plan is no longer worth the money. There are several factors that must be carefully analyzed before reaching to this conclusion. Find out more about when should you downgrade your car insurance. Also, check our website for car insurance quotes free.
The best thing to do is to review your policy every 6 months, or, at least, once per year. This way you will find out how much you pay and if it matches your current needs, financial status and budgetary limits.
Downgrading car insurance can happen for a particular number of reasons. For example, you finished financing the car and now it is totally yours. Usually lienholders will oblige you to have collision and comprehensive coverage while you still finance the vehicle. After that, it is up to you to decide if you want to keep those policies or not.
Moving to a better area of the country is another solid reason. Let’s say that you move in a rural area, really quiet and nice, with zero car theft, pleasant weather and no social tensions. Then, having comprehensive coverage does not seem that important.
The next thing to take into consideration is car’s value depreciation. As soon as you take the car out of the lot, its value begins to decline. And will keep declining for several years. At some point, the value of the car will become really low, usually after 10 years since purchase. Then you should apply the golden full coverage rule: When your yearly cost for comprehensive and collision coverage becomes greater than 10 percent of your car’s current value, that’s the point at which you can drop full coverage, and just keep the liability. This math is based on the law of averages for accident claims.
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