Is your car still worth the full coverage car insurance that you are paying for? That’s usually a pretty easy question. For example, if you still are making payments, then you need full coverage. But there are those gray areas.
Age Isn’t Everything
A car’s value is based on a ton of things, but the most important criteria boils down to condition, age, and mileage. A 2 year old car and a 10 year old car can be valued nearly the same if the younger one has way more issues. Does your car still fall into the “good” condition category or are there some major issues that need to be repaired. When you are thinking about car insurance, be realistic and truly evaluate your vehicle.
Look Up the Value
A great way to gauge what your vehicle is worth is to use sites like Kelley Blue Book or Edmunds. If you answer some quick data questions about your vehicle, those sites can let you know what to expect if you sold right now. When you know what your vehicle is worth, you can also determine how much coverage you may actually need.
For example, if your car is still worth more than $10,000 and you can’t afford to buy another one right now, then you probably need better coverage than liability only. But if your car is worth $3000 and you are paying more than $1000 a year for car insurance, it may be a better idea to lower your coverage to liability only and save the difference for a new car purchase in the future.
There aren’t any hard and fast rules of thumb that work for absolutely everything, but you can be honest with yourself. What can you afford? What seems like a crazy amount to pay for premiums for your specific car? When you get to the point that full coverage is silly, you can at least be happy that you will pay less for less coverage.
Find the Best Deal
If you do decide to lower your coverage, remember to get multiple quotes since you will have to make an insurance change anyway. You can find a site for your location, like iselect for car insurance comparisons in Australia, and get a handful of quotes at the same time. Or you can call around and speak directly with representatives. Just keep in mind to get all of the quotes based on the same information and choose the company and deal that works best for you.
Time flies and knowing when to dial back car insurance coverage can be tricky. Just keep an eye on it once every year or two so you don’t accidentally waste a ton of cash.