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Car Depreciation and Coverage Limits

It's important for all drivers to get an appropriate amount of car insurance to cover their vehicles. You don't want to be caught in a car accident and then not be able to get the repairs made to your vehicle because you don't have enough coverage. When you are securing coverage, you will need to be conscious of how depreciation factors into things. You may want to reconsider how much coverage you need based on how fast your car is going to depreciate over time. When you consider deprecation, you may be surprised at how much coverage it turns out that you need.

When you have a new vehicle, your coverage is only going to pay for the value of the vehicle and nothing more. A lot of times, though, an owner can have a vehicle that they owe quite a bit on. If you owe more than your car is worth because it has depreciated, then you might be in a tough spot. You should constantly be thinking about how much your car has depreciated and what kind of payout you could expect to receive on a claim. You might not be able to get as much as you think.

Deprecation and New Cars

If you are thinking of purchasing a classic car, then depreciation is something that is going to be very important for you to consider. Although a lot of drivers don't realize it, new cars are known to depreciate really quickly. In fact, as soon as you drive a car off of the lot, it's probably going to depreciate by a few thousand dollars. Because the car has depreciated so much, you may not be able to get enough money to pay off your loan if an accident occurs. This can be a real financial issue for lots of drivers.

In order to make sure that your loan will be paid for if you get into an accident with your new car, it may be a good idea for you to secure gap coverage for your vehicle. With gap coverage, you are going to get the difference between what your car is actually worth and how much money you still owe on it. When you secure this kind of coverage, then you don't really have to be too concerned about deprecation. You can have some peace of mind while you are behind the wheel.

Depreciation and Older Vehicles

You should also consider deprecation when it comes to your older vehicles. If you have secured a certain amount of coverage for your car and you just keep renewing each year without reviewing it, This is often an unwise thing to do because your needs are going to change due to depreciation. There is just no reason to keep securing the top amount of coverage when your car isn't really worth that much anymore. You should sit down and rethink your options at the end of each year.

One area where you may be able to cut some coverage down due to depreciation is on comprehensive coverage. This kind of coverage is full damage to your vehicle that is not caused by a collision. If, for example, a natural disaster damages your vehicle and you have comprehensive coverage, then the policy will kick in and pay for it. However, your policy is only going to cover what the actual value of the vehicle is and nothing more. If your car has depreciated quite a bit, then you will need to lower your coverage. Consider car depreciation and coverage limits when you secure a policy.

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