When to Reduce Your Auto Insurance Limits

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The current state of the economy means that some of us are spending a lot of time scrutinizing our bills and spending habits in an effort to find ways to cut back and save. Sadly, despite its importance, many of us are also looking at our auto insurance policies, wondering if there are ways to cut costs. While not always recommended, knowing when to reduce your auto insurance, and how, is important to ensuring you do not dig yourself into a financial hole if you are in an accident.

Reviewing Your Liability Limits

Most states have a minimum required level of bodily injury and property damage liability you must carry in order to drive a vehicle. Many drivers purchase limits higher than the minimum, recognizing that the minimums might not be enough to pay if there were a serious accident. If you're looking to cut costs, however, you may consider lowering your liability limits.

What most drivers don't realize when they try to reduce their auto insurance limits is that the cost of liability coverage is nominal compared to some other coverage. Ask your agent to quote the difference between your current level of coverage and the state minimum. You'll find the difference is maybe $150 to $300 dollars, equating to a very small amount of savings per month not worth the risk of having to pay the difference if you cause an accident later on down the line.

Checking Your Medical Coverage

Not all states require you to carry medical coverage, or Personal Injury Protection, but some do. The first thing you want to do is check our standard health insurance policy if you have one. Some health insurance policies will not pay for injuries caused by automobile accidents, believing auto insurance should pick up the tab. Others will cover your injuries. If your health insurance does not exclude auto accidents you may be able to reduce your auto insurance by lowering the medical coverage on your auto policy.

Comprehensive and Collision Coverage

Most drivers buy comprehensive or collision coverage to pay for damages they may cause to their own vehicles in an accident. This is great if you have a new car but older cars with very low values aren't necessarily worth insuring. If, for example, your car is only worth $1,000 and you have a $500 deductible, you'll only get $500 from a claim. You'll pay much more than that for the coverage and, in essence, could probably have saved that money to replace the vehicle or repair it on your own.

Knowing when to reduce your auto insurance can be tricky but is something you should take very seriously. Having too little coverage could get you into a lot of trouble later on down the line. Consider using our site to shop your car insurance instead. You might find a lower priced policy with the same high coverage options you already have a much safer choice!

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