What Can I Do to Lower My Car Insurance?
Many drivers today are faced with increased car insurance costs and are unsure how to maneuver through the insurance minefield. Television commercials are all about obtaining the lowest cost insurance. What they do not discuss is what you have to give up for that low price insurance.
We, at MD Collision Center, suggest that you perform an insurance needs analysis with your insurance agent. As with any component of auto insurance, cost is driven by the:
- Driver’s age
- Driver’s experience
- Value of the car
- Area where the car will be driven
- Estimated annual mileage
Once you determine how much insurance you will need, you can decide the amount of risk you are comfortable assuming. This is known as self-insurance, coming in the form of a deductible. Many consumers do not know the amount of financial risk that is at stake when they drive a car or have passengers who ride with them.
Consumers have a number of options for reducing premiums:
- Drop the coverage
- Reduce the coverage
- Change insurance companies
- Increase the deductible
The option that you choose could leave you and your loved ones vulnerable to financial disaster in case of an accident.
If you are a driver in California, dropping coverage is not an option. California State Law requires that all drivers carry auto insurance: The Minimum Liability Insurance Requirements for Private Passenger Vehicles (California Insurance Code §11580.1b):
- $15,000 for injury/death to one person
- $30,000 for injury/death to more than one person
- $5,000 for damage to property
Sometimes you will see on your policy 15/30/5. The deductible will only apply to repair your own car if you are at fault and the insurance carrier is responsible for the other party. In the minimum range is not where you want to be. When you are in an accident, and if a driver’s liability is greater than $15,000, the options become garnished wages or seizure of property. The minimum coverage in all likelihood will not be enough – given hospital cost and the litigious nature of our society.
If you are in an accident and the other party does not have insurance, be sure to have enough coverage for uninsured motorists. This will insure that you do not have to chase down the other motorist to be reimbursed. Most likely, if a motorist does not have insurance they will not be able to pay to repair the damages.
To some drivers, reduced coverage may be the answer. Going from 250/500 to 100/300 could save as much at 10% in premium costs. Reduced coverage may affect your other coverage. Many insurance companies have minimum-enforced car coverage in order to purchase an umbrella insurance policy. In addition, lower coverage carries the risk of exhausting coverage. Costs may rise very quickly if the accident involves hospital stays.
Many drivers believe that insurance will cover it all; however, that is not the case. Any cost above the insurance coverage will be covered by the at-fault driver in the form of garnished wages or seizure of property.
Like the shopper who goes for the best bargain, a driver who shops for the best-priced insurance will be sadly disappointed. Most insurance prices are comparable, and you will need to give something up in service, or coverage to lower your insurance.
I have seen where insurance companies offer tow service as an option. Car rental service for the time your car is in the shop can also be an add-on option. Some insurance companies give a loyalty credit as a reward for staying with them. Look at the consumer ratings and the number of complaints logged with your insurance commissioner before making any changes to your insurance.
Collision covers damage to your car when your car is impaired due to an accident. When your car collides with another object, overturns, or rolls – your collision coverage pays for the repairs. The deductible applies to a driver’s comprehensive auto insurance portion, and is a type of insurance coverage that protects against physical damage on the car, and is often referred to as other than collision (OTC) coverage, or Comp.
The insurance portion that covers the physical-damage coverage component has two distinct types of coverage: Collision and Comprehensive. Colliding with an animal, such as a deer, covers you not in collision; but in the comprehensive component. Comprehensive covers physical damage outside the realm of what is covered in Collision.
Comprehensive coverage does not mean that you are covered for any sort of damage to your vehicles; however, in reality comprehensive coverage only pays the cost of damages that occur as a result of a non-collision incident. If you do not have collision coverage, you will end up paying for the expenses incurred in an accident. Also, drivers should be aware that comprehensive covers the cost of repairing or replacing the car only, and does not pay for or replace personal items in the car that were damaged or stolen. Comprehensive also does not cover damage caused by normal road use.
Weighing the cost of the insurance coverage against the value of the vehicle will show if it is cost-effective to carry this coverage at all. Comprehensive and collision coverages always have a deductible, which can be as inexpensive as $200 and as expensive as $1,500. A higher deductible equates to a lower insurance premium. Drivers with older cars should consider removing collision and comprehensive coverage since coverage is normally limited to the cash value of the vehicle. Comprehensive coverage is highly recommended if your car is worth over $4,000.
A driver has multiple options in order to reduce their auto insurance costs with the help of an insurance agent. When an accident occurs, MD Collision Center can work with your insurance company to keep your out of pocket expenses as low as possible.