When the time comes for you to buy car insurance, you will have choices and decisions to make. One of the key decisions you must make is choosing liability-only coverage or full-coverage. Before you make this decision, it is vital for you to understand the difference between these options, and here are several factors you will need to consider as you make this big decision.
Loan versus owning the car outright
The first factor that you must think about is whether you own the car outright or have a loan on it, as the answer to this could dictate the type of coverage you need. With a loan on your vehicle, you will not be able to purchase liability-only coverage, as your lender will require that you have a policy that offers full-coverage insurance. If you own your car, you will not have a lender telling you what type of coverage to buy, which means you can choose the type you want.
Value of the car
If you do not have to carry full-coverage insurance on your car, it can still be a good idea to have, especially if your car is worth a decent amount of money. If your car is worth $10,000, for example, having full-coverage is a good idea, as you could lose out on the entire value of the car if you wreck it. If your car is not worth a lot, you would not lose out a lot if you wrecked it, so you should always factor in the value of your car when choosing what type of insurance to buy.
Another factor to consider in this decision is your financial position. If you have a lot of money in the bank and would not be adversely affected by losing your entire car and its value, then it may not matter to you if you wreck it and lose the car. If you do not have a lot of money, it is often better to fully protect a car you own rather than take a huge risk on it.
The other factor many people consider in this decision is the difference in cost between the two options. Buying full-coverage insurance will cost more, but it may not be a significant amount more than purchasing liability-only coverage.
After considering these factors, you will probably know which option is best for you. If you have questions about these types of coverage, or if you would like a free quote, contact an auto insurance company today.