How To Balance Auto Insurance Premiums Against Coverage
Posted on: 11 December 2020
One of the biggest concerns people have with auto insurance is trying to minimize their premiums while also getting the most coverage possible. It's critical to get the balance right because you don't want to be caught with too little coverage and paying for repairs or even claims out of pocket. How does a motorist strike that balance, though?
Establish How Much You Can Pay Out of Pocket
The first step in answering this question is to determine what you can afford to pay out of pocket if something happens. Premiums are driven by deductibles, the amount the insured party has to pay in case of an accident. If you have a higher deductible, meaning you pay more when an incident occurs, you'll pay a lower premium.
Bear in mind an ultra-low premium isn't the entire game. If you would expect to only be able to pay $500 out of pocket in your worst possible financial month, it's a bad idea to have a $1,000 deductible. Conversely, if you could easily afford a few thousand dollars, a high deductible might be worth it.
Look at your finances. Take a pessimistic view of what your worst possible money situation could be, and find a deductible that's lower than whatever that number would be.
Bundles
If you have more than one vehicle, throwing additional ones on the policy is a good idea. Tell the insurance agent you're interested in bundling your policies and getting a discount. Likewise, many companies allow you to bundle auto insurance with other policies, including ones to cover homes, rentals, boats, or motorcycles. If you're not sure what would get you the best deal, ask the agent to give you several quotes on different bundled combinations.
Find a Less Expensive Vehicle
It might be painful to part with a car you love, but the insurance company is charging you a premium with an eye toward replacing your ride if it gets totaled. Many agents are happy to quote auto insurance rates to people who are shopping around. You can call an agent with the VIN for a car and ask them for a quote for that specific vehicle. This can help you decide whether one car or another might be the best option in terms of your expected premiums. Bear in mind though that a loan provider may require you to carry full coverage on a car until a loan is paid off.
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