When we review clients’ auto policy renewals, if their vehicle is around 10 years old, we often suggest that they think about whether they still want to carry “full” coverage (or what we refer to as including Comprehensive and Collision along with their required liability coverage).

The auto policy will cover repairs to your car up to the vehicle’s Actual Cash Value or ACV, less your deductible. Say you’re in an accident that resulted in $3,500 in collision repairs to your car, but your car’s ACV is $2,500 and you have a $500 deductible. Here’s your settlement calculation: $2,500 ACV of vehicle less $500 deductible = $2,000 settlement.

Compare the cost of the Comprehensive and Collision against the vehicle value. Call your agent if you can’t locate the specific premiums. One good website to check for vehicle value is KBB.com.

The final decision on whether to remove coverage or not is a personal one. If you carry liability only and are coming up with any funds toward repairs or a down payment on a replacement vehicle is a hardship, getting a settlement (even though it is low) is better than nothing.

FYI, your car’s value may also suffer a reduction in value as a result of the accident. This is referred to as a diminution of value. The ACV of your car may have been $10,000 before the accident but because of substantial damage, the resale value suffers. Your insurance company is only required to pay the ACV or actual repair costs. It does not contractually cover the diminution.

Please call your Trusted Choice Independent Insurance Agent at Richey-Barrett Insurance to discuss your options.