Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 19, 2020

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Key takeaways...

  • Saving money is important in today’s economy
  • Comparison shopping is a good way to save money
  • Never cancel your insurance plan without having another in effect

In a downturned economy, everyone is trying to cut back to save a buck. One thing that often gets trimmed is car insurance.

One popular way to cut back is to downsize the auto insurance policy down to the bare minimum required by law.

Before doing this, there are a couple areas that should be examined to determine the wisdom of such a cutback. An alternative to try to find more affordable car insurance.

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Table of Contents

Determine the Amount of Insurance Necessary

There are a few questions that a person should ask themselves when determining whether basic car insurance coverage is adequate.

These include the following: 

  • What is my age and will I be eligible for a car insurance discount soon?
  • Do I have a history of being in auto accidents where I am at fault?
  • What are the laws for basic insurance coverage in my local area or state?
  • How populated is the area that I live in/ how likely am it that a hit and run will occur?

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Why Have More Than a Basic Policy

Car insurance companies often take the age of the driver into consideration when determining the premium of a driver. Insurance premiums generally drop at ages 18, 21, and 25.

If a driver is close to receiving one of these age discounts, a better insurance policy can be afforded for the same price.

Accidents can happen at any time to anybody, regardless of age. If a driver has a history of getting into at-fault accidents, it is wise to consider carrying a better policy.

An accident with inadequate coverage can leave an individual in financial ruin.

Medical bills, car repairs, and other accident-related expenses are sent to the insurance company of the driver who caused the accident.

Inadequate car insurance leaves the individual responsible for the expenses.

The lawsuit is directed toward the car insurance company with whom the driver is covered.Without sufficient insurance coverage, the individual can go after the driver personally.

Many states or local areas have a minimum insurance standard. All drivers are required to hold this amount to be in compliance with the law.

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Ways to Save Money on Car Insurance

There are many ways to save on the cost of car insurance without compromising the safety and financial security of you and your family.

Find out what affects car insurance rates below:

  • If you drive an older car that is typically worth less than $3,000.00, consider dropping collision coverage.
  • If you belong to memberships like AAA, consider dropping towing. It saves on average $10.00 per month.
  • Driving the speed limit ensures the safety of everyone.  It also saves money on speeding tickets and possibly insurance costs also.
  • Before buying a vehicle, research the cost of the insurance. Different factors change the price of insurance including make, model, and year of manufacture.
  • Have higher deductibles. Having a $1,000 deductible rather than a $500 deductible will save money on premiums. Low deductibles generally mean that the driver is paying more in the long run.

Is it worth it to carry only average car insurance?

While each situation is different, it is generally worth the small extra investment to carry more than basic insurance.

If something should happen, it would be tragic to be stuck with less than the needed amount of insurance for the claim being brought against the driver.

It is always good to get multiple referrals from trusted friends or relatives. Try to get opinions from people who have both average and extensive coverage.

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References:

  1. https://www.allstate.com/auto-insurance.aspx
  2. https://www.aaa.com/stop/
  3. https://www.nationwide.com/driving-safety-tips.jsp
  4. https://www.allstate.com/tools-and-resources/car-insurance/components-auto-insurance.aspx
  5. https://www.esurance.com/info/car/the-pros-and-cons-of-high-deductibles