If you are purchasing an older vehicle, before you sign up for full coverage insurance, you need to think carefully about what type of insurance it is really worth carrying on your vehicle. You want to make sure that the investment that you are making into your insurance is worth it.

Keep Your Liability Insurance

The purpose behind liability insurance is to cover any damage that your vehicle may cause to another person, vehicle, or personal property. There are two primary type of liability insurance that you can carry.

The first type of liability insurance is bodily injury liability insurance. This type of insurance will cover anyone whom your vehicle injuries. For example, if you are involved in an accident that is deemed your fault, and another party is injured, your bodily injury liability insurance will cover their medical bills up to the limit you are insured for.

The second type of liability insurance is property damage. This will cover any damage that you cause to another vehicle or even to someone's personal property. For example, if you rear end someone, your property liability insurance will cover the cost to fix their vehicle.

You should always carry liability insurance; this insurance protects you from any harm that you and your vehicle may cause to others. If someone tries to sue you, your liability insurance is what protects you. If you don't have liability insurance and you are sued due to a vehicular accident, your home and personal bank accounts could be at risk.

Reconsider Your Collision & Comprehensive Insurance

The second type of insurance that you may carry is collision and comprehensive insurance. Collision insurance is designed to kick in if you are in a vehicular accident; it will cover the cost to fix up or replace your vehicle regardless of the whom is at fault. Comprehensive insurance is designed for everything else that may happen to your vehicle. For example, if a tree were to fall on your vehicle, your comprehensive insurance would cover it.

This is where it starts to get tricky. Although it would be great to have your vehicle fixed up, if your vehicle is damaged and your insurance determines it would cost more than your vehicle is worth to fix it up, they will only pay you the cost of your vehicle. For example, you may have a fifteen-year-old car that only has 150,000 miles on it and has excellent maintenance records and is only valued at $3,000, although it would cost you considerably more to replace it with a similar well-maintained vehicle. Your insurance is only going to pay what they consider the vehicle is worth; they are not going to cover everything that you have invested into the vehicle.

Look up the value of your vehicle using a service such as Kelley Blue Book or a similar website that shows you your vehicle's value. If your vehicle is valued well under $5,000 dollars, you may want to reconsider paying for collision and comprehensive insurance. For example, if you have to pay $1,000 every year for this coverage, it may be better for you to invest that money into a car savings account so that, if anything happens to your vehicle, you can fix it yourself. If you are accident free for 10 years in a vehicle that is valued below $5,000 dollars, at the end of that 10 years, you'll have $10,000 saved up that you can use to fix your vehicle if it ever gets damaged or put towards a future vehicle purchase if your vehicle is damaged.

Before you sign up for insurance for your older vehicle, think carefully about the worth of each part of the policy. Liability insurance is always worth it because it protects you from being sued. However, depending on the value of your vehicle, it could be worth it to save up the money you would normally invest in collision and comprehensive insurance if the value of your vehicle is really low.  Contact a company like Independent Insurance Associates Inc for more information.