If you're looking to trim your expenses as much as possible, you might be eyeing your insurance bills. There are several ways to tinker with your auto insurance coverage to chop your premium to a bare minimum:
- Drop your liability coverage to the minimum allowed by state law.
- Drop your collision and comprehensive insurance.
- Keep collision and comprehensive coverage but increase your deductible to $1,000 or more.
- Drop your uninsured-motorist coverage.
How low can you go? You may be able to cut your car insurance bills in half by dropping your liability coverage from "recommended" limits of 100/300/50 down to 25/50/10 and eliminating collision, comprehensive and uninsured-motorist, or UM, coverage.
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The numbers for liability coverage refer to dollar amounts, in thousands. Here's how to decipher them:
- First number: Bodily injury liability maximum for one person injured in an accident.
- Second number: Bodily injury liability maximum for all injuries in one accident.
- Third number: Property damage liability maximum for one accident.
We looked at how coverage would change for seven cars, calculating average national premiums for a 40-year-old single male driver. Policy limits of 100/300/50 assume a $500 deductible. We used model year 2004 for all quotes because drivers often drop collision and comprehensive insurance on older cars.
| Vehicle | 100/300/50* coverage, including comprehensive, collision and UM | Coverage of 25/50/10, with no comprehensive, collision or UM | Savings |
|---|---|---|---|
$834 | $426 | 49% | |
$786 | $338 | 57% | |
$878 | $420 | 52% | |
$905 | $438 | 52% | |
$885 | $412 | 53% | |
$768 | $355 | 54% | |
$1,268 | $426 | 66% |
*In thousands of dollars / Source: Insure.com research
Consider the risk
Remember this: Dropping your car insurance to a bare minimum opens you up to substantial risk."You want to consider that very carefully. You're trying to protect the assets you have," says Robert Passmore, a spokesman for the Property Casualty Insurers Association of America, an industry trade group. If you have a house, savings and investments, they could be put at risk if you cause a large accident where damage exceeds your insurance limits. And if you've dropped your uninsured-motorist coverage, a driver with no insurance could wreck your finances, too.
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Passmore notes that the most expensive coverage dollars are the first dollars. In other words, $100,000 in coverage does not cost twice as much as $50,000 in coverage. "It's like getting a volume discount," he says.
Another quick way to save money is to comparison shop and change companies based on price. Before you leap to another insurer, check its track record. You won't receive more value for your insurance dollar if your new company has poor customer service. Many states release "complaint ratios" showing the relative number of consumer complaints against each company. Contact your state insurance department for that information.
Continued: Your state has a bottom line
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