If you purchase a second car that is older and not very expensive, you may wonder if you should carry full-coverage insurance on the vehicle. Before you decide whether you should or should not have full-coverage, you should consider the following things.
The difference between full-coverage and liability insurance
Full-coverage insurance offers protection for you if you cause an accident that leaves damage to your own car. The insurance company would pay for you to get the repairs you need. Liability coverage from a company like Nelson Insurance Agency provides protection to other drivers if you cause an accident to happen. If you purchase full-coverage insurance, you will also have liability coverage. If you purchase liability only, you will not have full-coverage on your vehicle.
Loan vs. no loan
The first thing to know is that if you have an auto loan on the car, you do not have a choice with this. You will have to purchase full-coverage insurance. If you do not have a loan, it is up to you which option you choose.
The value of the car and the deductible
One of the most important factors to consider in this decision is the value of the car, as well as the deductible amount. If the car is worth $10,000 and your deductible is $500 or $1,000, it would make sense to have full-coverage insurance. If you caused an accident and wrecked your car, your insurance company would pay the full value of your car, minus the deductible.
Now, consider a different example. If your car is worth $3,000 and you have a $500 or $1,000 deductible, the most the insurance company would pay is $2,500 if you wrecked your car. This is not a whole lot of money, which is why people who buy cheap cars do not typically carry full-coverage insurance on them.
The price difference in insurance types
The other big factor to take into consideration is the difference in costs for the policies. If you can purchase liability coverage for $30 a month, how much more would it cost to add full-coverage? If it would not cost a lot more, it might be worthwhile; however, it could cost a lot more, making it not really worth the extra cost.
Having full-coverage insurance is a necessity in many situations, but it is not always beneficial. If you are not sure if you should have liability only or full-coverage insurance, contact an auto insurance agency today.
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