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Is your insurance coverage right for your car's age?

Many people were raised to be full coverage or liability only folks. When should you have which? You don't WANT to have to pay to replace your car but if the value to total the vehicle is less than the amount to repair it, that's what the insurance company will do with full coverage. Older cars should always be considered for liability only. Newer cars generally are required to have full coverage while being paid for because the loan holder does not want to risk having the car wrecked without replacement costs. The gray area between a new car under loan requirements and an old car that obviously needs only liability leaves the dirty details for you to decide.  Find the Kelley Blue Book value of your vehicle. Get the annual cost of collision (full coverage) and the annual cost of liability only coverage.
value of car  / (collision-liability premiums) = years until you've paid to replace your car.
Your car is worth $3,000 on KBB. Collision is $600. Liability is $100.
In six years you will have paid the insurance company the money they would give you today if  you totaled your car.
Your car will have also depreciated in six years to $2,000 (give or take). If you wrecked it in six years, they would only give you $2,000 and you will have paid them $3,000 (more paid above the liability premium).

Insurance is about risk. You don't know if you'll wreck your car tomorrow, ten years from now, or if you'll sell it as an antique when you're a dinosaur. The decisions are all yours to make.

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