There are a couple of questions that you would want to ask yourself before deciding on the necessity of Scottsdale collision coverage and or the deductible that is right for you.
- Is your vehicle newer or expensive to repair or replace? If yes, then collision coverage is probably right for you.
- Is your vehicle financed or leased? If so, most lenders will require you to obtain collision coverage and require you to have a maximum deductible of $1,000.
- Do you feel comfortable with being able to replace your vehicle if were in an accident and the car was “totaled”? If you answer no, then collision coverage should be added your Scottsdale AZ auto insurance policy.
Everyone’s situation is different and so there may be other situations that obtaining collision coverage would also be recommended. If you’re living paycheck to paycheck, replacing your totaled vehicle may be very difficult without the help of your insurance company. However, if you have accumulated a nice financial savings, you may be able to afford $5,000 or more out of pocket to purchase a new or used vehicle. In the end, the choice is always up to you and should be made with what you feel most comfortable with.
Once you have decided that collision coverage is needed for your vehicle, you want to call your Scottsdale local insurance broker/agent and determine the price you will pay for this coverage. If you collision premium is $500 per year and your vehicle is worth $5,000 then you’re paying 10% of your vehicles value for this coverage. Plus, don’t forget your insurance company would only pay $4,500 in the event of a total loss because the first $500 (deductible) is your responsibility.
The premium you pay for collision coverage will tend to decrease each year the vehicle is in use due to the depreciated value. Typically, the older the vehicle and the more mileage you drive it, will decrease the value up to a certain limit. With that being said, there may be a time that it would be beneficial for you to remove collision coverage from your policy. When would this be the case for you? This can be a difficult question and your personal situation purely drives this decision. If your vehicle is worth $1,000 and you have a $1,000 deductible, then you’re paying for insurance that is not needed. In this situation, your insurance company will not payout for a collision claim because you’re responsible for the full deductible which is the full value of the vehicle.
You also have the option of raising your deductible to lower your up-front costs of your insurance. This may be a better option for you instead of completely removing the coverage. I would recommend discussing your situation with your local broker/agent in Scottsdale, Arizona and comparing premium changes on different coverages before deciding what’s right for you. In their end that is their job and can give you the best advice and make sure your properly covered at the best possible price.
