OAI: Ownership Study Should Prompt Re-evaluation of Optional Auto Insurance Coverages

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Owners who have kept their vehicles for an extended period of time may want to consider dropping comprehensive and collision coverage if they haven't done so already, according to OnlineAutoInsurance.com.

A new study from automotive information company Polk is showing that drivers are holding on to their new and used vehicles for longer than they ever have, a development that should have those car owners reevaluating the utility of keeping comprehensive and collision coverage on those older vehicles, according to OnlineAutoInsurance.com.

Polk says that "ownership cycles" are now the longest they have been since the company began collecting such data. Average American car owners now keep their vehicles for an average of 57 months, or 4.75 years.

For owners of new vehicles, the average jumps to 71 months, while the average for used vehicles is 50 months.

Since the longer an owner keeps a car means the less that car is worth, drivers who have had their autos for an extended period of time may want to consider whether it’s worth the cost of insuring the vehicle for physical damages with comp and collision coverage.

Owners trying to figure out whether comp and collision are worth it or whether they can be found cheaper can go online and get an auto insurance quote without personal info required to get a sense of the prices of these coverages for their car. Consumers may also want to generate estimates at varying deductible levels to see how this affects price.

The Insurance Information Institute (III) has espoused a general rule of thumb saying that it might not be cost-effective to have comp and collision coverage included on a policy if the car is worth less than 10 times the premium for those coverages.

So if you've got a car that's worth $3,500 and you're paying $425 for comp an collision every year--which was the average combined comp and collision premium in 2009, according to the National Association of Insurance Commissioners--it may be not be cost effective.

However, there is another way to lower comp and collision coverage: raise your deductibles.

According to the III, raising deductibles to $500 from $200 could cut the cost of those coverages by 15 to 30 percent. And going to a $1,000 deductible could bring even greater savings.

The III cautions that, if you do this, you be sure to have enough money set aside to cover that deductible in the event of a claim.

Source: http://publications.usa.gov/USAPubs.php?PubID=3187

For more on this and other coverage issues, head to http://www.onlineautoinsurance.com/quotes/no-personal-info/ for access to informative resource pages and a helpful rate-comparison generator that can be used to quickly evaluate comprehensive and collision costs.

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Benjamin Zitney
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