If you’re one of those who keeps looking for tips to save on insurance online, chances of you knowing this is very high – if the car you own is an older one, you must have a reduced insurance coverage.
While many people know about this tip (and even follow it if its applicable to them), they are not aware of why and/or how they must reduce their insurance coverage. Which is why we’ve decided to save you the trouble and explain it in a way you can understand and act on!
Getting collision or comprehensive insurance is not a mandatory legal requirement
Generally speaking, “car insurance” is a term that refers to a group of different insurance policies rather than a single one. While it is good practice to have all these policies as a part of your insurance coverage, it is not legally mandatory for you to actually have all of them. The legal minimum in all (bar one i.e. New Hampshire) states in the US is to have a liability insurance at the very least. Without a liability insurance, it is illegal for you to drive at all. Even in New Hampshire, drivers have to prove their ability to have enough funds to cover any damage caused by them.
A relatively cheap insurance, liability insurance protects you against the costs that you would have to pay if inflict any harm on people and/or property while driving. This includes both bodily harm as well as vehicle and property damage.
Ironically, most drivers in the US actually have collision and comprehensive insurance, instead of liability insurance. While collision insurance protects you against damage to your own car if it hits (or is hit by) another, comprehensive insurance protects you against losses that were indirectly caused by your collision, such as property damage, flooding or property etc.
If your vehicle is old, you’re probably paying much more than what is needed
If the vehicle you’re driving is an older one, you’re probably paying way to much for your insurance policy – which is basically pointless! By leaving out comprehensive and collision coverage from your insurance policy (which is not a legal requirement anyway), you will be able to save up hundreds (if not thousands) of dollars.
Saving up on money? Don’t go on that spending spree!
Now that you’ve dropped all those unnecessary coverage, you’re saving up on quite a bit of money. It is only natural to want to spend it on something you’ve always wanted. That’s not the smartest idea, though. Even if you’ve dropped the coverage, you’ll need to make repairs and/or pay should you ever be involved in collision. You’re better off making an “emergency fund,” which can act as your own personal insurance plan should you ever need to pay for vehicle repairs out of your own pocket.
How old is too old (your car, that is)?
Typically, there’s not criteria or bar you can use to classify your car as an “older” model. That being said, there are certain guidelines you can keep in mind, and certain questions you can ask yourself.
Here’s one such question: If your car needed multiple repairs all of a sudden, would it be more feasible for you to replace the vehicle? If your answer is “yes,” you’re better off doing away with collision and comprehensive insurance. Check the Blue Book value and see how much your vehicle is worth
Classic cars aren’t “older” cars
Believe it or not, if your car is a “classic,” you’ll have to do with a special kind of insurance called classic car insurance. These are used for older, but collectible vehicles, so long as they’re being used as a secondary vehicle. One car that fits this bill is the 1957 Chevrolet Bel-Air.