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Collision Insurance for Used Vehicles

Collision insurance for used vehicles is one of those uncertain topics that drivers must weigh back and forth in order to come to the right conclusions. In many cases it is not a slam dunk either way in terms of whether or not cars ought to be covered with collision once they get a little older. With new cars it is obvious, especially when we finance them, because in these cases we have no choice but to carry full coverage according to the demands of our lenders.

And with older used cars (aside from classics), it is obvious, too. These vehicles are not worth spending the money on a collision policy. The reason for this is simple: collision insurance is based on the market value of the vehicle. So, a $500 truck would only get you a $500 check less deductible if you were to total it, meaning for some of us who like high deductibles that we might actually not see a penny.

Value of Collision Insurance

The value of collision insurance rests in its essential nature as a form of automotive asset protection; and we all know that these assets depreciate over time unlike safe defensive driving. What this means is that the value of a collision policy depreciates right alongside the car as time goes by. Whatever the car is worth is all you would get for a total loss, after subtracting off your deductible. Think about that before enlisting in full coverage for a five year old car worth only three or four thousand dollars. Think about your deductible, and think about how much coverage that really leaves you.

When the annual premium gets to the point when it exceeds ten percent of the car’s value, most experts say it is time to drop collision. But this is no hard and fast rule. Different experts have different views and of course the choice is really up to individual drivers anyway. It is easy to get attached to your car and to think of it as maybe worth more money than it is, because it belongs to you and you have taken care of it all these years. But at a certain point, those extra financial resources should really be diverted toward saving for a new car (or at least a newer used one).

Dropping Collision Auto Coverage

When the premium is no longer justified by the coverage it provides, it is time to drop collision. Keep in mind that an auto insurance company will base payouts on its assessments of a car’s value, not yours. There is a strong possibility that your insurer might think your car’s worth less than what you think it is. And either one of you could be right or wrong. That is a debate best saved for actual accident claims. But here, as your car gets older, it’s time to focus on spending that money a little more wisely.

Get more value for your car insurance dollar. Increase the limits of your liability policy to add sensible protection, add uninsured motorist bodily injury, or simply put the difference away for a rainy day. Collision insurance and used cars are sometimes compatible to a point, but there comes a time when they have to say goodbye to one another. Make this choice in a logical way and don’t let your emotions get the best of you. There is no sense throwing money away in an investment that doesn’t provide the returns you need to see from it. Save your money when used car collision insurance gets to be inappropriate to continue.


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