You should drop full coverage on your vehicle when the premium exceeds the amount the insurance company would pay for your vehicle or you simply cannot afford the premium of full coverage.
An insurance policy that has full coverage is a policy that has comprehensive and collision coverage on the policy in addition to the mandatory liability coverage.
Having full coverage on your vehicle protects you from financial hardships if you are in an accident and your vehicle is damaged. This coverage will pay for most damages to your car and all you have to pay out of pocket is your deductible.
Before you make any changes to your policy always consult your insurance agent as there are times that keeping the full coverage on your vehicle is mandatory or will save you more money in the long run than what you would save if you dropped the coverage. But, if you feel that having full coverage on your vehicle may not be what you need right now, you need to ask your agent: “should I drop full coverage?”
Vehicle is Not Worth Much
If your vehicle is an older model and not in very good condition or the vehicle just does not have a high value the premium that you may be paying for full coverage on your older vehicle may be more than the insurance company will ever end up paying out for it. Instead it may be a good idea to cancel the full coverage on your vehicle and just put the money that you would be paying for the insurance aside to cover any damages that may happen to the vehicle.
If you are good at not spending this money, you will even have a down payment for a new vehicle if you older vehicle is totaled in an accident.
You Have the Cash to Pay for Damages
If you can afford to pay out of pocket for any damages that may happen to your car or a down payment on a new car if your vehicle is totaled, it makes no sense to pay an insurance company to do something that you can do yourself. If you never get into a car accident and the insurance company never has to pay out on any claims, you basically just wasted your money
You Cannot Afford Full Coverage
Sometimes no matter how hard you try the ends just don’t meet. To save money in your monthly budget you may want to consider dropping your full coverage on your vehicle as you only need the liability coverage to legally drive. However, if you were to get into an accident you are on your own to get your vehicle fixed and if your vehicle is declared a total loss by an adjuster you will have to find a different mode of transportation to get where you need to go until you can get the money together to get a new vehicle.
So keep in mind the consequences if you do drop full coverage on your vehicle and consider if the risk is worth the money you will be saving each month.