Why Full Coverage Auto Insurance for a Paid-Off Vehicle Makes Sense

Full Coverage for a Paid-Off Vehicle?

As vehicle prices continue to soar, even drivers who own their cars outright may face financial challenges if they carry minimal insurance and experience a total loss due to accidents, theft, or natural disasters. While paying off your vehicle grants you the freedom to reduce your insurance coverage, maintaining full coverage auto insurance might be a wise decision in today’s market.

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What’s the Difference in Coverage?

Understanding the difference between liability and full coverage auto insurance is crucial for making an informed decision:

• Liability Insurance: Covers damages you cause to others in an accident. It’s mandatory in most states but does not cover your vehicle’s repairs or replacement.
• Full Coverage Insurance: Combines liability with additional protections like collision, comprehensive, medical payments, uninsured motorist, and rental reimbursement coverage.

While liability insurance is cost-effective, it leaves you vulnerable to significant out-of-pocket expenses in case of a total loss.

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Vehicle Prices Continue to Rise

The surge in vehicle prices has made replacing a totaled car more expensive than ever. For instance, replacing a 2010 Ford F-150, a popular model, could cost around $51,000 for a new version or $18,500 for a used one with 100,000 miles—a 30% increase from previous years.

Drivers with full coverage insurance would face minimal financial strain in such scenarios, whereas those with only liability coverage might struggle to afford a comparable replacement.

Coverage Beyond Accidents

Full coverage insurance protects against more than just accidents. It safeguards your vehicle from theft, vandalism, natural disasters, and uninsured motorists. For example:

• Hurricane Ida destroyed hundreds of thousands of vehicles in 2021.
• Winter driving conditions account for over 17% of vehicle crashes.
• Nearly 13% of drivers nationwide were uninsured as of 2019.

These risks highlight the importance of comprehensive protection.

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The Cost Difference May Not Be Much

While full coverage insurance is more expensive than liability, the cost difference might be smaller than you think. On average, liability coverage costs around $700 annually, while full coverage averages $2,000. For many drivers, the added protection is worth the extra $108 per month.

Factors like age, driving record, and vehicle type influence premiums, so shopping around for quotes can help you find the best deal.

Other Considerations

While dropping full coverage might have been reasonable in the past, today’s market conditions make it a riskier choice. Full coverage provides peace of mind and financial security, ensuring you’re prepared for unexpected events.

Popular insurers like Allstate, GEICO, and Progressive offer online quotes to help you find the right coverage for your needs and budget.

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