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I live in the Bay Area, California. I had to take comprehensive (Liability and Collision) insurance and pay around $500 for six months until I paid off the debt. I recollect that I was required to take comprehensive if I have a loan on my car. Now that I have paid off the loan, how can I change my insurance to bring down the cost while maintaining the required coverage only?

  • You don't have to buy comprehensive insurance, but if you don't have it and somebody damages your car while you are not driving it, you will have to pay for it yourself. You also don't need to carry collision insurance if you want to take that risk yourself. – The Photon Nov 11 at 17:40
  • Are you trying to determine the minimum legally required coverage? Or the coverage that makes sense for your personal finances? – dwizum Nov 12 at 14:11
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If -- with your existing resources -- you can repair/replace the car after a collision, or non-collision incident (fire, vandalism or falling tree or hail, etc) then by all means cancel comp & collision.

If, on the other hand, you can't repair or replace it with your existing resources then definitely keep comp & collision until the car loses enough value that you can replace it.

EDIT: another alternative is to raise your deductible. That'll reduce your premiums.

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    The flip side of this is that the insurance company will pay for damage that is purely cosmetic, and which doesn't affect the driveability or safety of the car in any way. And of course the cost of the insurance reflects the cost of having to do all those cosmetic repairs. – jamesqf Nov 12 at 3:51
  • @jamesqf after deductible, of course. And they might raise your rate afterwards. – RonJohn Nov 12 at 3:58
  • It's probably worth commenting that (at least in the UK) fully comprehensive is often only very slightly more than "third party, fire , and theft" insurance.. The OP should get quotes. – Martin Bonner supports Monica Nov 12 at 12:58
  • @Martin Bonner supports Monica: But in the US, you don't AFAIK have that 3rd party &c option. You either have (mandatory) liability, which pays for damages you do to other people/property, or you have collision & comprehensive, which covers damages to your vehicle. But getting quotes should be the first step, of course. – jamesqf Nov 12 at 17:40
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If you don't have a loan on your car, you are not obligated to buy comprehensive or collision coverage.

But if you drop the coverage, you risk having to pay for any damage that occurs (or replace your vehicle) out of pocket.

An added benefit of buying insurance is that if someone else damages your car when you have insurance, the insurance company will do most of the work of collecting payment from the other party, saving you a lot of trouble.

Now that I cleared the loan, how can I change my insurance to bring down the cost while maintaining the required coverage only?

Call your agent (or call agents for several companies to get competitive quotes) and ask for a quote on the coverage you want. Then tell them to change your policy or cancel the old policy and start a new one at a new company.

  • Important thing here is taht full coverage also depends on the value of the car at point in time (like every year) and once your loan is up the car value is very likely lower, and you get a better categorization (for driving x years without accident). You may find that if your agent plays with the parameters, the insurance may not cost THAT much anymore. – TomTom Nov 12 at 10:50

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