Car Insurance
April 26, 2016
By Jack Ryder

Car Insurance Coverage You May Not Need

Simple. Thrifty. Living.

You’re required to carry auto insurance if you drive a car, but not all auto insurance policies are the same. Insurance agents may present you with a package that includes some coverage you don’t really need, so ask them to itemize each part of the policy they’re offering you. Each person’s situation is different, but here are three types of coverage that many people don’t need:

Roadside assistance is something you definitely need in an emergency, but you may have coverage from another source. If you belong to AAA, you are already paying for emergency roadside service – although your auto insurance company may provide the same level of service at far lower cost, so that’s worth checking. Likewise, many newer cars come with a few years’ worth of roadside assistance from the manufacturer. Finally, some credit card issuers offer emergency assistance as part of their built-in card services. This coverage doesn’t require any monthly or yearly fees, but you pay a deeply discounted price for towing and labor at the time you need the assistance.

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This type of insurance covers the difference between what your car is currently worth and how much you owe on your car loan. If you bought a car with a small down payment and it’s still quite new, you may owe more on your car loan than the car is worth right now. If your car were totaled in an accident, your regular auto insurance would pay you what the car was worth on the day of the accident. If you owe more than that amount on your car loan, you would have to pay the lender the difference out of your pocket unless you have gap insurance. However, as you continue to pay off your car loan you will reach a point where you owe less on the car than it is worth. As soon as you reach that point, gap insurance is meaningless and you should terminate the coverage.

This is another type of insurance that you may be able to skip, depending on the age and condition of your car. If you’re driving an old car that’s not worth much, you might not benefit from paying your insurance company for comprehensive coverage year after year. It may be financially wiser to just hope for the best and take your losses if your car is stolen or damaged in a storm.

Auto insurance is one purchase that you can customize to fit your personal situation. Save money by making sure you’re only paying for the coverage you really need.

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