Car Insurance and the Credit Crunch - Recession Effect on Car Insurance


The current recession is having a huge impact on every aspect of our lives. People are constantly looking for ways to cut back on everything from the mortgage payment to the grocery bill and car insurance is no exception.

Sadly, when it comes to choosing between making a mortgage payment, buying those groceries, and paying for car insurance, many Americans are taking a dangerous gamble. They're opting to skip that car insurance payment and continue driving, praying they won't get caught on the road without proper coverage. Some are making crucial life decisions while others are simply being irresponsible overspending on luxuries instead of making sure they can pay the bills.

Has the credit crunch caused your insurance premium to skyrocket as your take-home pay has dwindled? If so, there are a few things you can do in an attempt to lower your insurance premiums.

Make Sure Your Job Description is Correct

Did you know that your premium is impacted by the type of job you have? For example, stunt men, comedians, and salesmen who are on the road all day are considered higher risk drivers and pay higher insurance premiums. Office clerks, police officers, and corporate managers tend to pay less. Make sure your job is accurately described on your application and make sure it's updated if you switch jobs.

Check the List of Drivers

How many drivers are listed on your insurance policy. Is your teenage son, the one who just got his own brand new car and his own insurance policy, still listed? If so, send your company proof that he has his own coverage so that he can be removed. The less drivers you have on your policy the lower your premium (because the car will be driven that much less) especially if those drivers are teens.

Lower Your Liability Limits

While we very rarely recommend lowering your limits of liability there comes a time when you have to seriously weigh your options. Is it better to cancel the car insurance and face huge penalties and fines (plus paying completely out of pocket if there is an accident) or to take the risk of lowering the policy limits in order to at least maintain legal coverage? We think the latter is your best bet, especially if you're trying to save money thanks to the credit crunch.

If the credit crunch is making it difficult for you to pay your bills you should consider calling your auto insurance carrier and asking for help. A customer service representative should be able to help you review your policy, make sure you are getting all of the discounts you qualify for, and maybe even review your payment plan. If you have an accident after letting your coverage cancel you'll end up with even more credit problems than before. It never hurts to ask and, in the end, some coverage is always better than no coverage at all.

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