Deciding When It Is Safe To Drop Collision From Your Auto Insurance Policy

If you have an automobile insurance policy, and you feel your rates are a bit higher than you would like to pay, dropping collision coverage is an option you may have considered. While this is likely to reduce the amount of your insurance bill, conducting this action prematurely can cause you a larger loss in money should you get in an accident down the road. Here are some tips you can use to help you decide when is the best time to drop this coverage, if at all.

Determine Your Vehicle's Overall Value

Before you go ahead and do number crunching with rates your insurance company provides to you, it is best to know the value of your vehicle. This can be determined via a variety of sources such as getting an estimate via the automotive dealer where you purchased the vehicle, checking out online estimating calculators, or viewing vehicle value determination books. While the numbers may vary slightly, looking into as many sources as possible will give you a fair estimate on what you could sell your vehicle for should you decide to take it off the road. This number will help you in determining if your vehicle is worth repairing if you do get into an accident. If you believe you would purchase a new vehicle to replace the damaged one, dropping your collision insurance is feasible.

Decide How Much You Would Be Willing To Pay

If you believe you would go ahead with repairs if your vehicle becomes damaged, it is best to have a roundabout number in your head in how much you would be willing to pay out-of-pocket for this. If it is a low amount, and you would take the vehicle off the road should repair work go above your desired number, the amount of your yearly collision insurance may be higher than this amount. If this is true, removing collision from your insurance will save you money. Place the money you would pay for repair work in a safe spot in your home or in the bank should you need to use it, as the lack of this coverage would mean you would receive no payout from your insurance company.

Consider Increasing Your Deductible To Save

Many feel safer knowing they have collision insurance purely for the knowledge that they are covered should something bad occur to their vehicle. If you are not sure what your decision would be if you did get into an accident, or if you don't have the funds readily available to purchase another vehicle should yours become damaged, keeping your collision intact is best. If your bill is too high for you to handle, you may want to think about raising the amount of your deductible to save on your insurance costs. This will allow for you to pay lower premiums, but you will be socked with a higher payment should you get into an accident requiring repair work. This trade-off however, may be worth it if you are able to budget for this higher deductible amount if it is needed.

For more information or assistance, contact companies like McHugh Insurance.