Cutting Costs: Car Insurance

With the world in the midst of a staggering economic crisis, people are looking to save money anywhere they can. And, according to new reports from several major insurance companies, it would seem that car insurance is one area where individuals strapped for funds are more than willing to cut back.

Before you run out and kill your policy, however, you should know that there are multiple sides to the issue. Obviously, car insurance cannot be viewed as entirely “optional”, and we must do what we can to respect the very reason that we bought into such insurance plans in the first place: financial protection in the event of accidents.

If you aren’t covered by a sound insurance policy and so happen to get into a wreck with someone else, you might then find yourself totally devastated financially, with a ruined car you can’t afford to repair, and the legal liability to repair someone else’s car to boot. You might even find yourself paying someone else’s hospital bills, and that’s not an appealing prospect.

Nevertheless, this is one area in which you can save a good deal of money. Consider some of the following options.

If you leased your car or financed it from a dealership and made monthly payments, then it’s very likely that you were required to have “full coverage” on the vehicle for the duration of paying it off, as a form of protection for the dealership in the event that you were to wreck it and then go into default on payments.

However, if you have since paid your car off, you are no longer beholden to carry such expensive insurance. Call up your insurance agent and do a review of your policy. You might find that you’re comfortable with accepting a less thorough policy, for instance one with a higher deductible or one with less extra options such as roadside assistance.

You should also question yourself as to how long you’ve had your current policy. Unfortunately, car insurance is one of those bills that we tend to just pay month after month and then forget about it. Many of us are still dealing with whatever insurance company our parents used and have never even thought about shopping around for a new one.

However, if you’ve been paying the same monthly fee on the same policy for years, chances are good that you could be saving more elsewhere. Generally speaking, insurance companies aren’t going to volunteer the information that you should rightfully be paying them less; this is the kind of thing you have to investigate for yourself.

Also ask yourself whether or not your driving circumstances have changed in recent years. Insurance prices are determined not just by the driver’s history and the model of the car, but also by what the car is used for. A car that is driven 100 miles a week will have less cost than one that is driven 1000 miles a week. If your daily commute has been reduced recently, then you owe it to yourself to look into whether or not you now qualify for a reduced cost policy.

Part of responsible saving is knowing when costs can be cut without a reduction of performance. By reviewing your car insurance policy, you have an opportunity to do exactly this.