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If My Car Loan is Paid, Do I Still Need to Carry Collision Insurance?
January 25, 2020
The Need for Collision Insurance Is Determined By Many Factors
Insurance of any kind is a financial tool that transfers risk of loss.
An individual’s need for collision coverage is not determined by whether or not their car is “paid off”. Other factors determine the “need”.
If that logic were true, thirty years into a home loan, homeowners insurance could/should be canceled.
Whether a need exists for Collision
(or Comprehensive
) insurance after a car is paid off depends on:
- The value of the vehicle in question.
- The cost of collision insurance.
The insured’s ability to replace the vehicle in the event of an accident. (which would include a hit-and-run, a not-at-fault accident with an uninsured driver, weather-related accidents)
There are plenty of cases where it would make sense for someone to carry collision insurance on a car that was paid off, given a review of the decision points above.
If the question was “Am I required to carry collision insurance if my car is paid off” then the answer might be a short “no”.
On the other hand, even if a loan is paid off, if one is unable to absorb the financial loss of their vehicle and the cost of the coverage is reasonable compared to car's value, it may make perfect sense to say one "needs" the coverage.
Would you like to discuss your Car Insurance coverage in greater detail? We’re here for you. Give us a call at 607-324-7500, or contact us via chat on our website: https://www.ryanagency.com
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
“Am I covered if I drive someone else’s car?” Or, “Am I covered if someone else drives mine?”
Many don’t realize that the insurance industry is one of the country's most regulated business segments, especially in New York State. The New York State Department of Financial Services (NYS DFS) wields significant control over the insurance business and has a stated goal of protecting consumers.
Most property insurance companies offer Actual Cash Value or Replacement Cost settlement options. Typically, insurance companies will require that you insure the property to the settlement value you choose. If you select Actual Cash Value, the amount you may be required to insure the property for will be less than the corresponding Replacement Value.
In that spirit, the Ryan Agency is sponsoring a Stearns BBQ Dinner pickup at our office on 57 Broadway Mall in Hornell on September 12th from 3:00 PM to 4:30 PM.
Today, an individual’s credit history can play a more significant role than any one of those traditional factors. Good Credit Scores lead to a Positive Insurance score. A good Insurance Score greatly influences what someone will pay to insure their vehicles.
Insurance companies offer various discounts for which their policyholders may qualify.
Great Eight number Six (6) suggests taking a look at removing Comprehensive and Collision on Older Vehicles.
By reducing the number of claims in your insurance history, you can significantly affect your rates in the future.
Sometimes, this concept meets with resistance from policyholders. The thought of paying more in the event of a claim is off-putting to some. Even if that means I pay more for my insurance.
OK. Admittedly, this strategy doesn't benefit everyone, but it can be very beneficial for those it does. You may have unique home or auto insurance needs that prevent you from bundling with the same company. Alternatively… you might have a better rate without the bundle discount by splitting up your insurance between multiple carriers.
