This post is contributed by Spencer Josan.
There are so many specific factors that come into play when underwriting an insurance policy that there have been some rumors circulating on what people should and should not do to lower their premiums. The overall thing you need to remember is that regardless of what people say, you do need to go with the coverage that makes the most sense for you. People will always have opinions about the best type of coverage to go with, but only you know your exact situation and how much you need as protection in a worst-case scenario.
When you’re finally off of your parents insurance and have your own policy, take a look at a few of these examples to see if you’re going through the insurance-saving thought process correctly, or if you could be leaving some cash on the table.
Fact: It is ok to increase your deductibles
This one is true across the board, as long as you’re disciplined. Hypothetically, by increasing a deductible from $250 to $500 you could wind up saving a noticeable amount per month. Let’s say you saved twenty dollars a month by raising your deductible, you’d have $240 at the end of the year alone. However, you must be committed to saving this extra money, otherwise if you were to get in an accident, you’d still be required to shell out the $250 deductible increase.
Fiction: Decrease your limits to the state minimums
While you are technically in compliance with the law to have state minimum limits, you also need to consider how that could affect you. By having a state minimum limit of only $25,000 or $35,000, you are limiting your financial protection. If you were to be found liable for an accident, you need to think whether or not that amount of money would cover all of the damages. And, because you are in the country with the most lawsuits in the world, what happens if someone brings a false suit against you? That limit might get eaten up just to pay for legal fees and lawyers before you’ve even touched any bills from the accident. You may not need the highest limits around, but you absolutely want to be sure you aren’t limiting your coverage.
Fact: You don’t have to have physical damage insurance
As some people are constantly going after brand new automobiles that run into the tens of thousands of dollars for the sticker price alone, there is another group of people that understands the value of keeping a used vehicle with low miles on it. In fact, if you happen to be someone who has a beat-up vehicle or someone who has bought a used car for only a few grand, then it might make sense to avoid the physical damage cost altogether. Unless you live in the boundless auto insurance state of New Hampshire, when you go to check your monthly car insurance cost through comparison sites, you can instantly see that carrying physical damage on a beat-up car will still cost you hundreds of dollars per year. Instead of having a low deductible, it sometimes makes more sense to simply save up the money you would have paid on the insurance, and if something ever happens to your car, you can just scrap it and buy another used one with the savings instead.
Fiction: Avoid the bells and whistles and just stick with the car insurance
When some companies offer things like rental reimbursement coverage, towing and roadside assistance, and even glass replacement, you may want to think twice before rejecting it. Are those costs going to slowly add up? Yes. However, when you consider how often (and unexpectedly) a flat tire, a crack in the windshield, or engine trouble can occur, do you really want to pay a huge bill out of pocket when you could have just paid a few dollars more a month to have it thrown in? This coverage depends upon your personality, but it is definitely something to consider and not just avoid.
When you think about car insurance, you have to get in the habit of thinking about the overall quote and policy as being a glove. Does it truly fit all of your needs? Or are you just trying to force it to work? Car insurance isn’t the most confusing thing in the world, though it may seem that way sometimes. As long as you take the time to go over it all slowly then you can truly verify if any of the options make sense for you from both a cost and a coverage point of view.