“I paid my car off and now I want to cancel the insurance”

I paid my car off and now I want to cancel the insurance

I’ve heard this statement many times in the past 22 years. Many people think the only reason to insure a car is because the bank makes them. They forget that even after the loan is paid off their car may still be worth thousands, or tens of thousands of dollars. Each of us has our own individual level of how much money we can risk losing.

I’ve had a client who could afford to pay cash for a new $25,000 SUV and then not put comprehensive or collision coverage on it. In her words- “if I damage it I’ll pay for the repairs myself”. On the other side I had a client who bought a car at a yard sale for $300 and wanted collision insurance on it. I had to show him that the collision coverage was going to cost him more than he paid for the car. Most of us have tolerance levels that fall somewhere in between.

Before you take the comprehensive and collision coverage off your car you need to know what the car is worth. The online valuation services may not give you an accurate value. They can be very optimistic on how much your car is worth. You will find better numbers in the published guides which may be available in your local library. You also need to be honest with yourself about the overall condition of your car. Most of us tend to overrate the mechanical and appearance condition of our own cars.

So before you decide to remove the comprehensive and collision coverage from your car, be sure you know its realistic value and what amount of money you can put at risk. You should also check with your insurance agent to find out how much these coverage's cost you and how much money you would save if you delete the comprehensive and collision coverage's from your car.