When you are looking at your budget and trying to find ways to cut your costs, it can be very tempting to decrease your payments for car insurance. After all, you might think you never use it and that paying hundreds of dollars every month is just not worth it. When you add it up, you may find that you are paying thousands of dollars a year for car insurance.
But, spending money on car insurance is not like spending money going out to eat. Car insurance is required in most states and can lead to even worse personal financial outcomes if you don’t have enough coverage in the case of an accident. So, it’s important to find your own personal balance between cost and risk.
How much you want to pay for car insurance is really a personal choice and requires a little thought, and maybe even a little math, to end up with a number that is right for you. Think about it. If you cause an accident, you could end up having to pay much more than your total yearly premiums in deductibles and costs above your coverage limits.
So how do you find the balance between monthly premiums and the amount you will have to pay if you cause an accident? There are several ways to lower your costs. Let’s take a look at the benefits and risks of each.
Go for a higher deductible on collision and comprehensive coverage
Benefit: You can lower your monthly payment amount by choosing a higher deductible.
Risk: If you cause an accident, you will have to come up with the full amount of the deductible before the insurance company will repair your vehicle
Lower your coverage limits on all types of coverage
Benefit: Monthly premium payments will be lowered
Risk: If you cause an accident, you may not be covered for the full amount of repairs, damages, or injuries. You will have to foot the bill for the rest.
Skipping some coverages
Benefit: Lower monthly payments can be achieved by not carrying some coverage. For instance, not carrying collision on low value vehicle.
Risk: If you don’t have the cash to replace your car should it be totaled, and you aren’t carrying collision coverage, you may be without a car for a while
Alternatives that keep you covered, while lowering your monthly payment
Most people don’t take full advantage of the many discounts that car insurance companies offer to help alleviate the cost of your monthly payment. Some of these include:
- Bundling home and auto with the same company
- Safe driver discounts
- Corporate discounts
- Association discounts (like AAA)
- Good student discounts
Before you start lowering the amount of coverage you carry, which can put you at financial risk should you cause an accident, shop around for the right insurance company, one that has the discounts that fit your situation.
You can use the InsuranceWins form to get quotes from many carriers and find the best price for the coverage you are most likely to use and with the discounts that will help you lower your costs.