Is It Smart to Update Your Auto Policy Once You Own the Vehicle Outright?

When you have an auto loan out on your vehicle your lender will typically require a certain level of insurance coverage. Many people believe that it’s a good idea to drop certain coverages when they have paid off their loan and own the vehicle outright. At Schaller & Thomas Family Insurance we believe that our clients in the greater Peoria, AZ area should consider all of the implications of such a move prior to lowering their coverage. While your coverage will likely decrease in cost once you pay off your loan, it is not always wise to lower your insurance protection levels.

How Paying Off Your Car Loan Can Affect Your Insurance

After you have paid off your car loan you will likely notice a decrease in your policy cost. While this not always the case, it is a typical experience for many car owners. Because there are certain coverage levels that are instituted by your lender, you may be tempted to move away from those standards once your loan is paid off. This decision is best evaluated on a case-by-case basis, as every situation is different. There are a number of different factors to consider, such as vehicle replacement coverage and liability protection. If your auto is older and a replacement vehicle would exceed its value, it’s important to have the appropriate coverage level. Likewise for liability insurance, as this need does not change whether your own your car or not.

Residents in the greater Peoria, AZ area are encouraged to contact the team at Schaller & Thomas Family Insurance today to learn more about their auto insurance options. Whether you own your vehicle or carry a loan, we can help you determine which policy is right for you.