Published: September 2012
With the rising costs of buying and owning a car, some drivers are looking to cut corners. When faced with upgrades like leather seats or a premium sound system, the price tag for comprehensive insurance coverage premiums can seem like a luxury. Securing cheap car insurance may help you save a few dollars for now, but will it pay off in the long run? Here are a few things to consider that could greatly influence your decision when considering low-cost auto insurance.
All states have laws in place that require a minimum level of insurance coverage when you are buying insurance. If you're considering paring down your insurance coverage in an effort to save money, first find out what the requirements are in your state before making any decisions. In some cases, just because state laws don't require you to carry a particular level of insurance doesn't mean that you should go without it.
Buying low-cost insurance might save you money in the short term, but think about what could happen if you're involved in a serious car accident. Scaling back by eliminating collision coverage, which covers damage to your own vehicle, might be an option. But that doesn't necessarily mean it's wise to leave yourself open to paying out of pocket for potentially costly repairs. You should also think about the heavy financial burden of having to pay for the car repair of another person if you're found to be at fault for an accident. Just because you live in a state that only requires you to have $15,000 in property damage liability doesn't mean you'll be completely covered if you're at fault in an accident involving a car worth $30,000.
Many drivers, eager to shave money from their insurance premiums, forego signing up for comprehensive auto insurance coverage because they don't think they'll ever need it. However, doing so can mean that you may be forced to foot the bill for repairing or replacing your car if it is damaged by fire or flood. Comprehensive auto insurance also covers you in the event your car was stolen.
When you purchase car insurance, you have the option to add additional coverage that will protect you in the event an uninsured driver hits you. According to a 2011 study by the Insurance Research Council, estimates indicate that about one in seven drivers in the U.S. are uninsured. With odds like that, dropping your uninsured motorist's coverage could be a gamble.
If you are still paying off your auto loan, the lien holder usually requires you to purchase collision coverage. But, if you own the car outright, you get to choose which optional coverage, such as collision, you are going to carry. Without collision coverage, you could end up losing all the money you invested in your car if it is totaled in a crash. It may be worth considering carrying optional collision coverage to protect your investment.
If seeking cheap car insurance is at the top of your list of priorities, ask yourself if the benefits of saving a bit of money now are worth the potential risks you could face later. You might come to the conclusion that paying a higher premium is worth every precious penny.