Car Insurance – What shouldn’t you do? - Car Insurance

Car Insurance – What shouldn’t you do?

Posted in Car Insurance | March 25th, 2009

Car Insurance

The point is, you can save money on your car insurance. But the main thing is, you can not safely save money by slashing your coverage’s dramatically and dropping damage coverage for your car. If anyone out there tells you that you can improve your financial situation by calling your auto insurance company and buying a lot less coverage, they simply don’t have the entire whole story.

Cheaper is better
Sometime it is, but remembers that you will get what you pay for. Most people want to save money on their insurance premium. But no one wants to pay out of pocket when the unexpected happens. If you reduce your liability coverage and drop uninsured/underinsured motorist coverage, and drop comprehensive and collision or raise the deductibles, then you are one who pays when an accident occurs.

My neighbor saved a lot by receiving the bare minimum
I am not going say that it isn’t possible. If you only obtain what’s required then you can also save lot of money just like your neighbor. It’s just like a lottery, but that doesn’t make any sensible bet. Let’s look in deep and find out why,

Suppose you have an old car that’s only worth around $3,000. Your neighbor tells you he saved $450 a year by dropping collision coverage. As you like saving money, you will do the same, but the next week you lose control of your car and hit a utility pole. You were only going 20 MPH, but that’s enough to damage the car, since repair costs exceed $3,000. You did save $450 on your premium, but you have no car and no coverage. Now you have to find a car that’s as reliable as your old one for as little money as possible.

Suppose you also tried to save money by lowering your liability limits to the state minimum? For instance, in Ohio the minimum limit for property damage coverage is $7,500. If you knocked the utility pole over into a storefront, taking out power for the block at the same time, who will pay? If it costs $16,000 to repair the pole and replace the store’s window and display, you can be sure that the extra $8,500 will come out of your pocket somehow. If you have any assets, those will be used to provide payment, and if you don’t have assets, you’ll usually be asked to work out a payment plan. Now as you can see that you’ve actually cost yourself money instead of saving it, and this accident didn’t even involve any injuries.

How can I save money then?
As I said earlier that, it is possible to save money. Even though you don’t want to eliminate the protection you have with uninsured/underinsured motorist and Comp & Collision coverage’s unless there’s no choice, you still have options. The first thing you should do is make sure you’re getting all of the discounts you’re eligible for. After that, compare auto insurance rates from other companies to check if you’re paying more than you have for the same coverage. Rates can vary by a long way from one company to the next, so investing a little time in comparing quotes might pay big dividends in savings.

Some quick advice
Do not cut your policy limits. If you want to protect your asset for now and in future then don’t do it. It is too risky to cut your limits to state minimums. Insure your car against damage, even if you have to increase the amounts. Unless you can afford to pay cash to replace your car, try to keep it insured for complete and collision. Comprehensive in particular is relatively inexpensive, especially if you own an older car model. No matter how much someone else would pay for your car, in this economy it’s probably beyond price to you. Another thing you should tryout is the instant car insurance quote which allows you to receive an insurance quote by phone or online at any time of the day.