by BrijBrand Contributor, Shari Glover

Full Coverage versus Liability Only . . . that is the question.

I get asked this question all the time by customers who want advice on their auto insurance coverage.

When is the right time to transition from full coverage to liability only?

Here are a few questions to ask. 

  • Is the vehicle your primary mode of transportation and if it’s damaged in an accident can you afford to purchase a new one?  If the answer is yes, then carry liability only if you plan on replacing the vehicle and you can save some money in the process by removing coverage you don’t need.  If the answer is no, then carry full coverage because you’ll need the vehicle repaired and even if it’s totaled at least you’ll get some money that would help toward the purchase of a  new vehicle.

    Another option to consider is higher deductibles. This would give you peace of mind knowing the vehicle is fully covered and a lower premium.

    Age and condition of the vehicle also play a factor in carrying full coverage versus liability.  If you’ve made significant investments in customizations and upgrades, you’ll have to consider that particularly if it is an older vehicle.

Here are a few more considerations:

  • What’s the value of my car? 

    Establish the value of your car to see if it’s worth it to keep full coverage or not. A car is not a fine wine — it only depreciates with age (antique and collector vehicles excluded). As it gets older, the value goes down even if it’s been well cared for.

  • How much do I pay for collision coverage? 

    Here’s where your car’s value matters most and where you’ll need to do some math.If you’re paying an extra $60 a month to have full coverage, you have a $1K deductible, and your car is only worth $1,500, it’s not economical to keep full coverage.

    If your car were totaled, the insurance company would only pay $500, you’d be responsible for $1K, and you would have spent $720 annually paying for full coverage. You’ve then spent a total of $1,720 out of your own pocket. That’s almost the price of replacing your car and you’ve paid more to the insurer than you stand to get back if the car is totaled. It’s better to bank the difference.

If you have additional questions, connect with Shari at sglover1@farmersagent.com.

Shari Avatar small

Shari Glover is an Agency Owner with Farmers Insurance specializing in Auto, Home, Life and Business Insurance.  She is passionate about helping families protect what matters the most to them, and believes every question is worth asking if it broadens understanding and leads to the path of enlightenment. Want more info about Shari and the work she loves? Visit her website and follow her on Facebook.

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