February 14, 2010

When To Change Your Auto Insurance Coverage Limits

Checking your auto insurance coverage levels occasionally and changing them as needed is an important part of owning an auto insurance policy. Without proper coverage limits, you could end up in a terrible position after an accident, or you may pay too much from month to month, so careful evaluation every few months can be very helpful. Still, it’s sometimes difficult to know when a change is necessary.

First, it’s helpful to look at your driving habits and consider what you’d actually need in terms of insurance if you were involved in a major accident. Liability insurance is required by the state, but requirements are often set low–remember, if you’re found to be at fault in an accident, you’re liable for medical costs and property expenses, and your minimum coverage might not be enough to handle these occasionally enormous costs. Also, in that situation, you’d likely need coverage for medical bills and other expenses, which would come from non-mandatory coverage types. Therefore, it’s wise to buy at least a bit of additional liability and personal coverage, and it’s better to buy as much as you can afford. With that being said, you might reasonably try to find a middle ground between no extra coverage’ and ‘the maximum affordable coverage’ if you don’t drive very often, or if you always drive in the same low-traffic areas. Considering your driving habits can give you perspective on the amount of auto insurance that you actually need, and help you to pick a reasonable amount that doesn’t inflate your auto insurance quotes too drastically.

Once you’ve decided how much coverage you’d reasonably need, your job isn’t done. You should continue to examine your coverage levels every six months or so when renewing your policy, to determine whether to increase or decrease coverage amounts. Generally speaking, your auto insurance coverage limits need to change when your financial situation has changed and you’re not at your ideal coverage levels. Also when you can either afford more personal protection coverage to handle your expenses in the event of an accident or you’ve changed your driving habits and no longer need as much coverage.

If you’re looking for more coverage and are worried about the higher auto insurance quote that you’ll receive as a result, know that there are many programs offered by auto insurance companies that can provide a discount on your premiums. Low-mileage drivers often receive discounts, as do safe drivers and drivers in low-crime areas. Talk to your insurer about ways to keep your bill in line, but if you need more coverage, buy it–otherwise, you’re taking on a lot of risk.