I find many times people don’t truly understand if they should have full coverage or liability only on a vehicle. I have seen people put full coverage on 15 year old vehicles with 200,000 miles on it. The common misconception is that “full coverage” means that no matter what happens to your vehicle the carrier will take care of it to get it fixed. This is not the case. They will only give you the maximum of what the vehicle is worth.
So if you have a vehicle that is worth $2,000 and you total the vehicle, the carrier is only going to give you probably 75% of that which is $1,500. Then most of the time people have a $500 deductible in which case they will only pay out $1,000.
Now if you file a claim on your insurance that means it was either your fault or the other person did not have insurance. So now a claim that is likely an at fault accident will raise your rates that will likely equal more than $1,000 over five years which is how long at fault accidents stay on your insurance record.
So how do you decide? Go on Kelly Blue Book and see what the value is. Then from there you can decide if it is worth it. I would say if it is worth $1,500 or less you should definitely go liability only. Anything above that is a judgment call and depends on your current financial situation and if you could handle the loss.
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