Is insurance cheaper if you own the car?
Insurance can be cheaper if you own the car, but that depends on how much coverage you need and the kind of car you drive. Auto insurance policies offer multiple coverage types. If you are not the owner, your lender may require certain types of coverage for the term of your loan. Once you have paid off the loan, you can drop the additional coverage you don’t want to lower your rates. Enter your ZIP code below to find cheap car insurance rates today.
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
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UPDATED: Dec 12, 2023
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Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Dec 12, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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Insurance Q&A: “Is insurance cheaper if you own the car?”
It certainly can be cheaper, but the answer is really up to you. Auto insurance policies offer multiple coverage types for drivers. You just need to find the right insurance company to go through.
Typically, you are required to purchase liability car insurance coverage no matter what…if you want to ‘stay legal’ that is. This means that you can go with the minimum coverage, but you may want more if you’re looking to protect your vehicle from more than just accidents.
The second, potentially optional, coverage type is physical damage coverage. Physical damage coverage can be further broken down to collision and comprehensive coverage.
[Collision vs. comprehensive coverage]
And having both liability and physical damage coverage is referred to as “full coverage.”
Whether or not you obtain physical damage coverage for your vehicle is where the rubber meets the road on this post.
Opting for no physical damage coverage will certainly save you money on your auto insurance premium.
But that doesn’t necessarily mean you will save money in the long run…more on that in a minute though.
When is it required?
The fact is, if you financed or leased your car, you do not have the option to purchase physical damage coverage.
Your lender or lienholder will REQUIRE this coverage for the term of your loan or lease. This tends to vary from company to company, but you’ll find that most have minimum requirements set up.
This is to protect their financial interest in your vehicle. This means in the event of a property loss to the vehicle, they would receive their money first and the leftovers, if any, would go to you. Driving a leased car is driving a car that is protected from any sort of accidents, be it a collision, hitting a deer, or vandalism done by another person.
Read more: Deer Insurance
Tip: You may find it beneficial to purchase GAP coverage with a loan or lease as well. This can be tacked on to most insurance policies or added to the finance/lease agreement for a relatively small amount of money.
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When is it optional?
So, you’ve paid your car off. Congratulations! At this point, you actually own the vehicle outright and it’s completely up to you as to whether or not you wish to insure the car against physical damage. You can go with the cheapest option available, and it’s completely up to you.
This is technically when you can get cheaper insurance for your car by dropping the extra coverage. But, is that really a good idea?
Saving money on car insurance is a great thing. Just be sure you are not risking your personal finances to save a few dollars. There are definitely affordable options out there, it just depends on what services you want to pay for.
You may want to keep the physical damage coverage if your car is still valuable or if you’re not in the position to pay for repairs. Worse yet, if you can’t afford to completely replace the vehicle if it’s totaled. You may be out thousands of dollars to buy a backup vehicle if yours isn’t able to be repaired.
With no physical damage coverage in place, that would certainly be the case if you’re involved in an accident. Depending on what happens to your car, your finances might be in better shape if you have a more extensive coverage policy.
So now what?
Remember, insurance is a good thing. It’s designed to let us to pay an exact, expected amount of money in exchange for a whole bunch of money if it’s necessary…money you may not have lying around otherwise.
Getting a better deal may be as easy as switching insurers… and you may get to keep the same coverage you enjoy right now at a lower rate. Basic coverage can be tempting at first, but it won’t protect your vehicle from all aspects of life on the road.
Or, you might even be able to add additional coverage like accident forgiveness and/or ticket forgiveness for the same price. Finding affordable rates is as easy as getting in touch with an agent or looking into a quote online. An auto policy is a great thing to invest in, and if you own your vehicle, it’ll be easier to shape the policy into being financially manageable.
Read more:
- How to get cheap car insurance.
- Is insurance cheaper for cars or trucks?
- Is Insurance Cheaper for Older Cars?
- Why are some car insurance companies cheaper than others?
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.