Having good car insurance should
mean having meaningful financial protection. It shouldn’t mean paying for bells
and whistles you don’t need. Trim the fat from your policy by focusing on needs
and critically reviewing the extras you don’t.
Know Required Coverage
Before you start cutting optional coverage
from your car insurance policy, know what you should keep. There’s no
sense in decreasing your financial protection from accidents you just to save
money on your premium.
Go through your policy and highlight required coverage.
Understand what you need and what you can optionally add. You can always adjust
your coverage later as you determine your needs.
Know Your Car’s Value
Just because your insurance policy offers optional features doesn’t
mean you should keep them as your car ages. You may be paying more for your
policy than you ever recover in claims.
Know how much your car is worth versus how much you pay for
insurance each year. As your car gets older, you may find optional coverage
doesn’t give you much bang for your buck.
Decide If Comprehensive Is Right for You
Comprehensive coverage can protect you from theft, vandalism,
natural disasters, and many noncollision-related incidents. For some drivers,
there comes a time when keeping comprehensive
coverage just doesn’t make sense.
●
Compare how much your car is worth to what you
pay for comprehensive coverage each year.
●
Think about the likelihood of theft or harsh
weather in your area.
●
Consider if you could comfortably replace your
vehicle.
●
Review your insurance policy before making
changes.
If comprehensive coverage no longer provides value, it might be
time to let it go.
Think Twice About Collision Coverage
Collision coverage can help pay to repair your car if you are
involved in an accident. Even if you are not at fault, your insurance company
can require you to pay a deductible before they pay for repairs. If your car is
older, you may think about dropping collision to save on your premium.
Before you drop coverage, take a minute to really understand what
you could pay if you get into an accident. Don’t drop collision just to save
money if it means you can’t comfortably cover repair bills or replacement
costs.
Avoid Duplicate Coverage
Look for areas where
your car insurance overlaps. You may already have coverage
through your vehicle warranty or from a roadside assistance program attached to
your credit card. Don’t pay twice for the same benefits.
Here’s a quick comparison of common sources of duplicate coverage
to help you evaluate your car insurance policy:
|
Source of Coverage |
Typical Features |
Cost |
Overlap Examples |
|
Car Insurance |
Roadside Assistance, Rental Car |
$10-$30/month |
Overlaps with credit card or auto
club benefits |
|
Credit Card |
Roadside Assistance, Travel
Protections |
Varies (free/annual fee) |
Similar to insurance add-ons |
|
Vehicle Warranty |
Repairs, Roadside Assistance |
Included with purchase |
Roadside overlaps with insurance |
|
Auto Club |
Roadside Assistance, Travel
Discounts |
$50-$150/year |
Duplicates roadside insurance
options |
Use these comparisons to check your protections and ensure you
aren’t paying double for identical benefits.
Go through your protections and see what you already have. If your
insurance is offering duplicate coverage you don’t need, cut it from your
policy.
Review Rental Coverage
If your car is in the shop due to a covered accident, you pay for a
rental car through your insurance. Does your budget allow for you to pay for a
rental car if your car is being repaired? You may decide you don’t need this
coverage.
●
Do you have another vehicle in your household
you could use while your car is in the shop?
●
Are you able to consistently use public
transportation?
●
How much does it cost to rent a vehicle where
you live?
●
How much would you save if you dropped this
coverage versus how much you’d likely receive in benefits?
Don’t simply accept rental coverage because your insurance offers
it. Take a look at your situation and make a decision that makes sense for you.
Compare Roadside Assistance
When your vehicle breaks down, do you have roadside assistance?
Some insurance companies offer this as an add-on, but you may already be
covered by an automobile club, your manufacturer, or through a roadside assistance
program you bought.
Compare what each company offers and make sure you aren’t paying
for the same benefit twice.
Increase Your Deductible
Your deductible is the amount of money you pay before your
insurance pays on a claim. You can usually lower your premium by increasing
your deductible. Before you do this, make sure you have enough in savings to
cover repairs or total loss.
Just because your premium goes down doesn’t mean you’re saving
money if you can’t come up with your deductible after an accident.
Skip Insurance Add-ons You’ll Never Use
Cars insurance companies offer all kinds of extra insurance
coverage. Some of these additional endorsements just don’t apply to your
situation. Picking every box may increase your premium without providing you
real life benefits.
Look at your optional coverages and ask yourself if you need it.
Consider your commute, your car’s age, and your budget before saying yes to
add-ons.
Reevaluate Your Policy Each Year
Life changes. You may move, change jobs, buy a new vehicle, or pay
off your loan. Any number of life changes can alter your insurance needs. Take
time each year to review your policy and eliminate coverage that you no longer
need.
Just because you once needed an insurance coverage doesn’t mean you
still need it. Keep your policy streamlined and only filled with protections
that you need.
Compare Prices Before You Renew
Insurance companies all weigh risk differently. That means you
could very well find a lower price for the same coverage from a different
company. Before you renew your policy each year, shop around.
●
Get quotes regularly to know what your current
insurance would cost you if you started new today.
●
When you get quotes, ensure you are comparing
the same deductibles and level of coverage.
●
Ask about discounts.
●
Ask if your policy can be customized.
Price shopping doesn’t have to be difficult. Keep these tips in
mind and find the best price for the coverage you want.
Don’t Just Look at Price…
Your cheapest insurance option may not be the best option. Yes, you
want to save money on your auto insurance, but not if you are sacrificing
protection you may need. Don’t get distracted by small savings if it means
going without important coverage.
Look for insurance that provides you the best value. Feel confident
that you aren’t paying for unnecessary coverage, but you also have enough
protection if you’re in an accident.
Simplify Your Car Insurance
Minimalist car insurance isn’t about having the bare minimum. It’s
about paying for insurance that you need and skipping the stuff you don’t.
Review your policy, make smart decisions about your coverage, and compare prices each year.
You can have control over your car insurance prices and still be
well protected if the worst happens.
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