Should I carry Comprehensive & Collision on my Auto Insurance?

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Transcription:

Slide 1:
 
Hello! I'm Dan Lyles with Lyles Insurance. And in this video, we're going to cover a very often asked question: Should I carry Comprehensive and Collision coverage on my auto insurance?
 
Slide 2:
 
As you can see here, there are five major parts to an auto insurance policy. And Comprehensive coverage and Collision coverage kind of work hand-in-hand as the fourth and fifth parts.
 
Slide 3 :
 
Comprehensive and Collision coverage together provide the physical damage coverage on your vehicle. Now, while these are both optional coverages, if you finance your vehicle, your bank is going to require you to carry both Comprehensive and Collision coverage until your loan is paid off.
 
Slide 4:
 
So now, let's go over what Comprehensive and Collision actually covers. And the best way to understand it is to learn it backwards. Collision coverage pays for damage to your vehicle from an accident. Whether it be just a two-car accident, a one car where maybe you ran off the road and hit something and damaged your vehicle, or multi vehicle accident. Anything like that is under Collision coverage. Comprehensive coverage, which is also known as “Other than Collision” coverage in some states, it pays for damage to your vehicle for just about anything else. Examples include theft, fire, vandalism, weather damage, hitting a deer, things like that. They both pay for damages to your vehicle up to its market value minus whatever deductible you choose.
 
Slide 5:
 
So now let's dive into the question: Should I carry Comprehensive and Collision coverage? And this applies whether you already have Comprehensive and Collision coverage on one or more of your vehicles. Or if you're looking for a new policy and a vehicle to insure. The main thing to remember is that the coverage amount offered on both Comprehensive and Collision coverage will slowly drop over time as your vehicle depreciates in value. And this leads to much debate about when is the right time to drop or pass on it. Some suggestions you might hear people say, is to drop it as soon as you've paid off a car loan. Some say when your vehicle reaches a certain age or whether your vehicle(s) market value drops below a certain amount. Keep in mind there isn't a right or wrong answer. My suggestion is to do the math and decide for yourself. And I'm going to help you with that.
 
Slide 6:
 
Before we get into doing the math, it's important that you understand how deductibles work. Deductibles are your out-of-pocket expense whenever you have a Comprehensive or Collision claim. Let's suppose for example that you have damage that costs two thousand dollars to repair: If you have a 250 dollar deductible, a claim would pay out $1,750 (2000 - the 250). Same with the $500 deductible. A claim would pay out $1500. Or, if you had a thousand dollar deductible, the claim would pay out a thousand. So deductibles have an inverse relationship with price. The higher the deductible, the lower the premium (but of course that also means more out-of-pocket money if you have a claim. And vice versa, the lower the deductible, the higher the premium.
 
Slide 7:
 
The best way to determine whether to keep or drop Comprehensive and Collision coverage is to simply do the math and decide for yourself. In order to do that, you just need to know three variables: the market value of your vehicle. What deductible you are carrying. And also, find out how much extra premium that you're paying just on the Comprehensive and Collision parts, and add those together.
 
Slide 8:
 
So to do the math, you simply take the cost of premium for Comprehensive coverage. Add that to the cost of premium for Collision coverage. And compare the total with the market value of your vehicle minus the deductible. This will allow you to answer two key questions: Number one, How long would it take of paying the extra premium to equal the market value minus the deductible on your vehicle? And number two, If you were to drop Comprehensive and Collision coverage, could you afford to replace your vehicle if you were to total it? And again, there are no set right or wrong answers to this question. This is something you need to decide for yourself.
 
Slide 9:
 
I hope this video has helped you understand the thought process of comparing whether or not it's worth it to keep or drop Comprehensive and Collision coverage. If you have any questions, I'll be happy to help you. I've posted links to my auto insurance web page, my email address, and my phone number. And if you would like for me to personally run you a quote, and you live in Ohio, Indiana, Pennsylvania, Michigan, Virginia or West Virginia, click on and fill out the quote link below. And I'll be happy to run you a quote and get back to you with prices. Thanks for watching. And have a great day!

Link from video: Auto Insurance Page
 

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