I get asked this questions a lot and like the answers to most insurance questions, it is subjective.  When you are considering dropping comprehensive and collision deductibles depends on the age, value and condition of the vehicle as well as your own financial position. 

The majority of people carry $500 deductibles, indicating that this is the amount that they will pay towards a claim.  So when considering removing collision coverage you have to ask yourself, what is my car worth now.  If the answer is $1,000 or less you should seriously consider removing collision coverage.

If your car is worth $1000 and you have an accident, most likely your car will be totaled and the most you will get is $500 ($1,000 the value of your car minus your $500 deductible).  If you are carrying collision coverage, you are paying more for that coverage.  Is it worth it to pay an extra $100, $200 or more for collision coverage a year in insurance premiums if your car is only worth $1,000?  I would think not.  You are better off removing the coverage and taking the savings and put it in a savings account to go towards a new car in the event of accident. 

Now what if your car is worth more than a $1,000?  That depends on you own financial situation.  If you would rather take the savings on insurance and risk the chance of having to pay for any repairs to your car or purchase a new car due to an accident that is deemed your fault, that is your choice.  You want to make sure that you would be able to do it comfortably though.  You wouldn’t want to find yourself in a situation that you couldn’t afford to repair or replace your mode of transportation. 

If you are considering dropping comprehensive and collision coverage, I usually recommend that you start with collision coverage.  Collision insurance is more expensive and will give you the most savings.  Comprehensive coverage is less expensive and provides you with some valuable coverage.  Comprehensive will cover you if you hit an animal; your car is stolen, a tree falling on your car, you vehicle catches on fire, a windshield crack/chip, pretty much anything that doesn’t involve hitting another car.   

If your car is older and the value has decreased you can even decrease your comprehensive coverage and you won’t see a dramatic increase in your premium.  If a client is considering removing comprehensive and collision coverage, I will usually recommend they start with collision and then if they are carrying a $500 deductible for comprehensive, I will recommend that they consider decreasing that to $250. 

The decision to remove or reduce coverage ultimately is up to each individual and will be based on their personal circumstances.  It would be nice if there was a clear cut formula, but it is a subjective decision for each person.

Has your business changed in the last year?  Maybe over the past 2 or 3 years it has changed?  If it has it is important to notify your insurance agent.  If you are thinking of adding more services, you should consult with your agent. 

When I sit with a business owner, I’m basing his/her insurance coverage at that point in time.  I recently had a client that when we originally met he was doing primarily siding and window installation, a year later I find out that he is doing roofing.  Well that is a big difference, his policy covers him for siding and window installation, not roofing.  If he was to have a claim when he was performing a roofing job, he would find that his policy would most likely not cover the loss.  This is a serious exposure for a business owner.

Insurance is there to protect your business, to help you weather large claims.  If your business has changed or is in the process of changing, notify your agent.  You don’t want to find yourself not covered for a loss.

I recently had a claim from a client that damaged his snow mobile while he was out riding.  His track ended up breaking, which damaged a number of the components in his engine.  At first glance he didn’t think that the damage was significant.  He was even considering not submitting a claim.  That changed after he took the sled to the dealership for an estimate. 

The dealer said that it would cost $2,700 to fix his sled and it was pretty close to be totaled.  My client was worried that if they totaled the sled that he wouldn’t have enough money to buy a new one or fix his current one.  Even though, I’m looking forward to spring, I know some of you are looking forward to at least one more snow fall.   

So how would the insurance company settle this claim?  The insurance company has the option to take the less expensive of the two options.  They can opt to repair the snow mobile if it is less expensive than the market value of the sled or if the repairs are greater than the market value of the snow mobile he would be paid the market value of the sled as determined by the insurance company.  Either way he is still going to be able to ride for the rest of the winter. 

If the insurance company opted to total the snow mobile he wouldn’t be able to go out and purchase a brand new sled, but he would be able to buy a comparable sled to what he has now.   

I assured him that he wouldn’t be left out in the cold without a snow mobile, that the company would settle it fairly and quickly, which they did.