When Can You Drop From Full-Coverage To Liability Only?
by Vilma Maki
Auto insurance is a vital part of every driver's life. If you drive, you need coverage, and you also need coverage if you own a car that you do not drive. Auto insurance is vital for every car owner and driver, but the types of coverages you need varies. If you currently have a policy that provides collision and comprehensive coverages, you have a full coverage auto insurance policy. There may come a time when you do not need this much coverage, though. At that time, you could switch to a liability-only policy. If you are wondering when you can change, here are some factors to consider.
You Pay Off Your Car
If you ever owe money on a car to an auto loan lender, you cannot get around the full-coverage auto insurance requirement. Lenders have this requirement in place for a purpose, which is primarily to protect them. After making your last payment on the loan, you will no longer have a lender telling you what coverage types you need. Therefore, when you pay off your loan, you have the right to reduce your coverage to a liability-only plan. Now, switching to a liability-only plan is not always the right choice after paying off a car loan, but it can be in some cases.
Your Car Is Not Worth Much
One situation when switching to a liability-only policy after paying off a car loan is a good idea is when a car is not worth much. If your car has lost a lot of value and is not worth much, paying for full-coverage insurance does not make sense. Instead, you can save a lot of money by switching. If your car is still worth a lot after paying it off, you might want to keep collision and comprehensive coverages on your vehicle.
You Stop Using Your Car
The other situation when changing to liability-only is helpful is when you stop using your car. If you pay off your car and decide to stop using it for any reason, you will not need full-coverage insurance. Instead, you could get by with having liability coverage only.
If you pay off your car, you can switch to a liability-only policy. You can also change policy coverages for the other reasons listed here. If you have questions about changing your coverage or getting coverage from a new company, reach out to a company like The Policy Center.
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About Me
After we purchased our first home, we realized that it might be a good idea to evaluate our insurance coverage. Although we had purchased homeowners insurance before, we had never owned a policy as large as the one we would need for our new place. Also, our new home had a trampoline and a swimming pool, which made us worried about liability. To iron out the details, I decided to meet with our insurance agent. We talked about things like monthly premiums, coverage limits, and deductibles, and it was incredible to learn more about the terminology. This blog is designed to help you with the same types of questions.