In our eBook, Building Wealth, we discuss budgeting and setting spending limits. Always a challenge for the best of us. Looking to save money on auto insurance is a good fit for your budgeting and spending exercise.
In Building Wealth we talk about the importance of budgeting and tracking spending, when we begin the process of tracing our spending, it’s hard not to notice the things that are impacting our monthly expenses the most.
Other than your housing costs and car expenses, the next items that may be impacting your spending are likely your television (cable or satellite), cellular phone, and then your auto insurance expenses.
Many of us look at these 3 items and know that there is plenty of tangible benefit from television, and none of us are really considering ditching our cell phones or a data plans. That would be ridiculous! :)
So, many of us will look at ways to save money on auto insurance, it’s the least tangible thing on the list, and the benefits are more abstract … especially since we’re all convinced we’re not going to have an accident.
Things to think about before save money on auto insurance spending, think about the difference between savings and cutting coverage.
Your auto insurance is actually part of your overall financial plan, it’s the foundation of the financial pyramid, and without this essential protection you may be putting personal assets at risk. Therefore, before you begin to “cut” your auto insurance coverage, you need to carefully consider your financial plan, and achieve this savings without “cutting” coverage.
Why should I not cut my auto insurance coverage?
Take a run through these three (3) reasons why cutting auto insurance protection is not such a good idea:
1. What if you need your auto insurance coverage?
Saving money on your auto insurance with super-low monthly premium sounds good … so long as you never actually have to use your insurance coverage. When you've skimped on coverage or opted for a high deductible (or both), your insurance no longer provides the same level of protection if you get into an accident — in fact, what was once a savings can become a burden as you now have to come up with more money for deductibles or even pay for some repairs out-of-pocket.
Opting for the low-cost/low-coverage option often means deferring a serious payments, and if you’re already in a monthly budgetary crisis, this can only complicate thing.
Insurance is about transferring your risk. We do this because a loss, if we have to absorb the costs, might be financially troublesome. If you find yourself having to dig into savings to resolve a loss, then any savings you may have realized is lost.
Therefore, you don’t necessarily want to reduce your coverage to save money, you want to have the “right” coverage, so you are properly protecting your assets and keeping the foundation of your family’s financial plan intact.
2. State minimum coverage may not provide the right level of protection
Some states have high minimum coverage limits, while others have surprisingly low ones. Like California, the minimum limits are only $15,000 per person and $30,000 per accident for injuries, and $5,000 for property. But accidents don’t cost more in one state than they do in another and some cars can be pretty expenses to repair. Who has to come up with the difference? If you answered, YOU, then you would be correct.
Minimum insurance limits aren't necessarily an indication of what you need, it’s generally less protection that is actually required based on the true, potential costs of injury and property damages.
3. Optional auto insurance coverage provide a lot of protection
It might be attractive to save money by waving unfamiliar optional coverages. Sounds good?
But will your bare-bones liability coverage cover a stolen car? No!
Coverage options like comprehensive and collision aren’t usually required by law, but going without them leaves you responsible for a number of potential expenses. Basic liability insurance, which is the only required insurance for most states, protects other people and helps protect you for damages you may cause to others, but it doesn’t actually cover costs when something happens to you or your property.
If another driver accidentally damages your car, you are banking on them having enough coverage to pay for your repairs. But what about an accident with a pole, or back into a fence? That’s when purchasing collision coverage comes in handy as it assists in fixing your car.
Save money on auto insurance but don’t cut coverage
As with any products purchased you want to get the right value for what you've spent. You should shop your insurance, compare apples-to-apples, and get a review so you understand your assets relative the level of protection you’re purchasing. Make educated and informed choices on the amount of risk you’re willing to retain, and transfer the risk to your insurance company that will cost you undue financial harm.
Don’t allow your desire for short-term savings create a situation where you've exposed your assets creating potential long-term financial harm.
Want to know if you can save on home or auto insurance? See for yourself. Start a quote today.
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IronPoint Insurance Services is an independent insurance agency licensed (#0G87821) with the California Department of Insurance. We are authorized agents for many A+ rated Arizona, California and Utah insurance companies. We provide consumers with online, phone, and in-person insurance services through our insurance company relationships. IronPoint Insurance Services, LLC offers multiple insurance quotes to provide consumers several options for their insurance products. We offer auto insurance through Mercury Insurance Group, Travelers Insurance Companies, The Hartford, MetLife Auto & Home, and Progressive Drive Insurance. We are authorized insurance agents for these companies and do not charge any fees for our services. If an IronPoint insurance agent trys to charge you broker or agency service fees for representing these companies, please contact us immediately.