Purchasing the right car insurance policy is a delicate balancing act. No one wants to pay too much, but without the proper coverage, far bigger expenses may await down the line. Frugality is a good thing to aim for, but before cutting parts of an insurance policy can even be considered, the policyholder has to know what absolutely must be covered. The good news is that taking certain measures can reduce the overall insurance bill without requiring any other alterations to the insurance policy. When it comes to what absolutely must be covered, that hinges on factors like the age of the policyholder, the condition of the vehicle being insured and the age of the vehicle, and so on. However, there are things that should be covered under every circumstance no matter what.
Level With the Insurance Company
Lots of people are into body modifications, and in general, they end up paying higher premiums. Some try to skirt around this by excluding body mods from what they report to their insurance company, but if anything happens, the insurance company may deny their claim.
The same may apply to mileage. Most people drive over 12,000 miles per year, and while it’s possible to get a steep discount for driving less than that, mis-reporting the number of miles driven annually could also lead to the denial of an insurance claim in the event of an accident. The best case scenario is that someone who has done this would have to deal with a lot of bureaucratic red tape on the way to getting a claim fulfilled. Accidents can happen even to the safest of drivers, and being honest with an insurance company can save someone a lot of money in the long run.
If a person is ever deemed at fault for an accident, he or she could end up on the hook for all of the expenses incurred by the other party without the right insurance coverage. For example, there’s a provision under Texas law that requires the person who’s liable to pay a minimum of $20,000 for each personal injury, and although it’s capped at $40,000, that’s something most drivers will never be able to afford. On top of that, the person liable also needs to pay $15,000 for personal property damage. Someone without the right insurance may carry a lifetime’s worth of debt. It costs a little extra to insure the cost of these liabilities, but it’s only five dollars for most people, and although younger people have to pay more, it’s worth it.
Offsetting the Cost
Purchasing the right insurance is well and good, but it has to be affordable because otherwise it just helps someone dig a deeper hole for themselves. While driving less can result in major discounts, it’s not always feasible. That’s doubly true for anyone living in a rural or suburban area. If someone were to manage it, just getting under the 12,000 mile mark may not provide enough of a discount to warrant a change in driving habits.
The easiest way to compensate for increased insurance costs is to go with a higher deductible. Many people have deductibles that are only a few hundred dollars, and increasing that to $1,000 or more can lead to a huge discount on someone’s monthly insurance bill. It might seem pretty steep at first, but it’s better to be on the hook for $1,000 than the $10,000 or $20,000 that may be required when the policyholder is underinsured. Insurance should always be purchased with the future in mind, and while no one likes to think of the worst case scenarios, everyone that does is better off because of it.
Sereh Shirley lives and writes in London. She writes for www.carinsurance.org.uk where you can find more information on car insurance, trips, and tips for saving money when you drive.