First Person: Why We Kept Full Coverage on Our Paid-Off Vehicle

In just a few months, our truck will be paid off. Right now our state requires us to keep full coverage on the truck, which runs us $73 a month or $876 a year. We plan to keep the truck covered fully even after the payments are done. This is why we are keeping full coverage even though it is almost double the cost of liability insurance.

The coverage

Right now, we are fully insured. If anything was to happen to the truck, our deductible is $1000 and it would be repaired. While I am not extremely happy with the high deductible, I understand why my husband did it at that rate. If we had it set at $500, we would be paying nearly double a month for the same insurance. Right now, this makes sense and keeps us legal.

What liability would cover and cost

I priced out liability insurance with the company we use and it would cost us just under $43 a month. That is a $30 difference, or $360 a year. While it may seem like a huge savings and something we should definitely do, the coverage is next to nothing. If you hit someone, your insurance would pay but in any other case, you would be left to pay out of pocket to fix your vehicle or junk it. We cannot afford another vehicle right now, so chancing a wreck is not an option.

Why we are keeping full coverage

If something were to happen to our truck, we wouldn't be able to get a decent car to replace it. Right now we have a savings account that is very small, and my husband's credit is shot. It is in our best interest to keep the full coverage despite being able to save $30 a month. The $73 is already figured into our budget, so we won't miss the additional savings. It is better to be protected now, especially since we would be in a financial crisis if something happened to the truck. It is easier to come up with $1000 for repairs than it is to come up with money for another vehicle in the same shape.

I am all about saving money in any way possible, but I cannot justify putting our finances at risk to save money. We have a budget in place and the full coverage payment is already figured in. Down the road my opinion may change, but as of now, we will be keeping our full coverage even after the truck is paid off.

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