February 2, 2010

Using Low Coverage Auto Insurance As A Temporary Solution

Sometimes motorists simply don’t have the necessary funds for a high amount of auto insurance coverage. This can be a serious problem since you cannot legally drive without auto insurance, but in bad economic times there is sometimes no alternative than to cut a bit of coverage. You will often hear from insurance experts that this is a bad plan; driving with inadequate insurance coverage puts you at high risk, and if you are involved in an auto accident, you could be in serious trouble. Nevertheless, sometimes cutting a bit of coverage can be a necessary move, and as a temporary solution, it can help drivers get out of a jam.

Your coverage levels make up a very big part of your auto insurance quote, so lowering coverage lowers the premiums that you will be paying. By checking with your state insurance commission or contacting your insurance agent, you can restrict your coverage to the state-required minimum levels. If you’re leasing a car or using a loan to buy it, you’ll likely need some amount of comprehensive coverage as well. (This is often in your loan or leasing agreement; it protects the bank from a potential loss). You can also raise your auto insurance deductible in a few areas, as this will further decrease your quote, but be sure to leave the deductibles at a level where a minor accident would be affordable. You should always assume that an accident is possible, even if you are only cutting back on your auto insurance for a month or two while you get your finances in order.

It’s very important to switch your auto insurance coverage levels back to a reasonable amount once you’re able to afford the cost. Remember, an accident is always a possibility, and more coverage is actually a good deal when you consider the peace of mind that you’re purchasing. Before you increase your coverage levels, talk to your insurance agent to try to negotiate a lower price than what’s advertised on their website or company literature.

If you’re uncomfortable with changing the levels of your auto insurance coverage, there are other options. Using cost-comparison websites can help you find a company that offers better rates for the same amount of coverage. You can take a driving class or get court supervision if a recent accident or citation has caused your rates to rise. You’ll get a lower premium and will avoid taking a hit to your driving record. In any case, only use low coverage as a temporary solution to financial problems; otherwise, you will pay for it in the long run.