Blog Entries
Full Coverage or Liability Only Insurance Which Should I Get?
Category: Member Blogs
Tags: accident car cash collision insurance liability premiums

Let's talk about full coverage car insurance vs. liability only insurance. First of all, full coverage insurance is where the insurance company agrees, for a premium, to repair or replace your car in the event of a loss. Liability insurance is just that, the insurance company accepts no liability to fix or replace your car. This begs the question, should I have full coverage or liability only insurance. Now there are formulas out there that try to help you make that decision. My advice on this is pretty simple. We buy insurance for things that in the event of a loss, it could ruin our lives financially. So keeping that in mind, if someone has a car valued at $2,000, they don't have money saved (they are broke), and it costs them $200 to insure that car for a year, I am going to recommend that person get full coverage insurance. If that car is a total loss, it will ruin their week, it will ruin their month, and it will ruin their life financially. If a person with a car valued at $2,000 is financially set, meaning they can write a check if their car is a total loss, this is a different scenario. This accident is not going to ruin their week, their month, and not going to ruin their lives financially. This would be a situation they could carry liability only on the car.

There is a second step here. It is going to depend upon the cost to insure that car for full coverage compared to what the value of the car is. A $20,000 car as an example costs $120/month to insure it. It makes sense to pay for full coverage. Another way you can look at it is if you are considering dropping full coverage for liability only, this sometimes doesn't make as much sense in the purpose of saving money. Sometimes full coverage is a "good buy". Some full coverage rates are too good to pass up. If you have a car valued at $6,000 and the cost to insure it is $600/year, you can see that even allowing car depreciation every year, I would have to go somewhere around 5 years without an accident before the total amount of premiums I have paid in is more than the value of the car. It sometimes can end up being a good value to keep full coverage.

RSS
Search

Recent Comments
No one has commented recently

Entrepreneur
Member Activity

Dec 30th

Delete uploaded a new profile photo.

Oct 26th 2018

Its In The Script uploaded a new profile photo.

Feb 7th 2018

Enhanced DNA uploaded a new profile photo.

Jul 3rd 2017

Kodin Digital uploaded a new profile photo.

Jun 26th 2017

Tatijana Marsee uploaded a new profile photo.
RSS
Members Online
There are no members online.
Videos
Indiana Small Business Expo Fall 2015
Added by Cathy Padgett
Posted on September 13th 15
0 Comments
Interview with April Yvette
Added by Cathy Padgett
Posted on September 13th 15
0 Comments
Interview with Terry Moore ISBE 2015 Fall
Added by Cathy Padgett
Posted on August 27th 15
0 Comments
Indiana Small Business Expo, Spring 2015
Added by Cathy Padgett
Posted on August 27th 15
0 Comments
About the Indiana Small Business Expo - Spring 2015
Added by Cathy Padgett
Posted on August 27th 15
0 Comments
2012 ISBE Testimonial
Added by Cathy Padgett
Posted on April 5th 13
0 Comments