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If you’ve been through the process of owning a vehicle, you understand it can be a pretty big deal. You officially own your vehicle and no longer have to worry about monthly payments, car loans, or annoying lease agreements. The big thing that comes with owning a car is deciding how to insure it. If you have a lease or a loan on the vehicle, you’re sharing ownership with a dealership or bank and thus need to make sure it’s probably insured. But, if you own the vehicle, you have some freedom when it comes to insurance that can save you money. Let’s explore.
Paying off your loan and officially owning your vehicle is a big step. You can remove your additional interest/loss payee from your insurance information and don’t have to worry about paying any car payments. In terms of insurance, what happens next is really up to you.
If your vehicle is still relatively new, you’ll probably want to keep all your coverage to protect your asset. In the event you want to buy a newer vehicle and start this loan/purchasing process over again, the sale of your original car could be used to make a down payment. So, you’ll want to maintain physical protection (your collision and comprehensive coverage) to protect it.
If you’re uncertain and looking for ways to cut insurance costs, you could consider if the value of your owned vehicle is worth the premium it costs to insure it. Here’s how to tell:
However, if the difference weighs in the favor of keeping the coverage, you could consider raising your deductible. Your deductible and your premium are inversely related - meaning, if you raise your deductible, you lower your premium.
By doing this, however, you assume a greater responsibility in the event you need to file a comprehensive or collision claim. Which, isn’t always a bad thing. While many people assume you should always file a claim if you’ve damaged your vehicle, you can seriously impact your insurance record and premium. Your collision coverage should be used lightly because the use of it is usually considered an at-fault accident. Meaning, your rate will increase and will increase for 3 years as most companies charge (rate) you for accidents and violations for 3 years.
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