subject: Reducing Your Car Insurance Rates Premiums [print this page] You are not required to carry insurance that protects only your property. If you still have chattel mortgage or lien against your car, the contract you have with your lender will force you to carry these coverage types. If you have paid off your auto, you can decide to keep or drop these aspects of your policy. You can shrink your automobile insurance premiums if you cut or lower these parts of your insurance policy's protection.
Collision insurance can compensate you for the cost to repair your automobile when your insured auto hits or is hit by another car. It can also pay the cost to replace your car when your insured auto hits a fixed object such as a fire hydrant.
Comprehensive insurance is also known as "Other than Collision." This type of coverage pays for damages caused by flood, vandalism, contact with birds or animals, etc...
Since both collision insurance and comprehensive insurance pay for damage to your automobile and not someone else's, you can decide whether to drop these from your policy. However, if your car is leased, or you have a lien on your car, you probably will not be able to do so because the actual owner of the automobile or the bank or lender will want their interests protected.
The liability portion of your vehicle insurance policy is the primary part of the policy that pays others for their damages. If you run into another automobile and you don't have collision insurance, it won't matter since your liability coverage will pay the other party. Why Should You Eliminate Collision Insurance?
The premiums for this part of your automobile insurance coverage may be more than you want to pay. If your vehicle is totaled, the insurance company will only pay you its book value. At some point, you may feel that the book value has dropped enough that threats of the collision insurance is no longer justified by the potential payment you might get from your insurance company. If you own your auto free and clear, you can ask your insurance company to drop or lower the coverage.
You can reduce your collision coverage by raising the deductible. This will reduce the premiums and still give you some protection. Your bank, lender, or leaser may allow you to raise the deductible since this protects their interests to some degree. Why Should You Drop Comprehensive Insurance?
The logic behind dropping or reducing automobile comprehensive insurance is the same as the thinking associated with eliminating collision insurance. However, since the cost for comprehensive insurance is less than the cost of collision insurance, you may want to keep it even after you have dropped your collision coverage.
If your auto is leased or you have a lien on it, you may not be able to drop the coverage. However, the leaser or lender may allow you to reduce the coverage by raising your deductible. This will reduce your premiums, although not as much as completely cutting the coverage would.
Most cars lose value when they get older. This reduces the amount of money that an insurance company is likely to pay to repair or replace an auto. At some point, you may feel that the amount of premium your auto's collision or comprehensive coverage adds to your car insurance bill is too much. Exactly when that point comes is determined by your personal comfort level with risk.
Cutting comprehensive insurance coverage and/or collision coverage means that you take more risk. If your feel that you are unlikely to have an at fault accident because you have a good driving record this may make sense for you. If you garage your vehicle your car is perhaps less likely to be stolen or vandalized. If this is the case, you may want to drop the coverage.
by: Alston Balkcom
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