—
Everyone who drives a car needs auto insurance coverage. Cars are an important part of our lives, and they are a big investment as well. You want to make sure that in case of an accident, you don’t have to shell out hundreds of thousands of dollars. This is the reason why it is a legal requirement to have liability coverage in almost every state in the US (except for Virginia and New Hampshire).
While for the most part, you are okay with your car insurance coverage. But there are times when you’d need to add a little bit of change to your policies or change the policies altogether. This article will look at all the possible scenarios when you should alter your car insurance coverage, and when you shouldn’t. Let’s get started.
When Your Policy Period is About to Expire
You found a great auto insurance policy. It saves you money while offering great coverage for your vehicle. But the thing is, the auto insurance market is ever-changing. With the coming of new technologies, the rates of vehicle insurance policies keep going down every year. So why stick with the same company when you can get a better deal somewhere else?
So when your current policy is about to expire, look for other companies and get an auto insurance quote. Compare different companies and their prices, coverage, and customer rating, and make the best decision. This practice can help you save so much money. But you need to make sure about something before you make the switch.
Many auto insurance companies reward people for not making any insurance claims by giving “no-claims bonuses” which slashes the price of insurance renewal. So if you have not made any claims during the policy period and have these bonuses, look for them. If you get a better deal from the current insurance company, then no need to switch.
When Your Mileage Reduces
The pandemic showed the world how much can be done just by staying in our homes. The world is now accepting this hybrid work trend where you don’t have to go to the office every day. If for some reason the mileage of your car is reduced, and you do not drive your car often, then it is time to make a switch.
Instead of having a general auto insurance policy and paying for coverage, you do not need, to switch to pay-per-mile or usage-based auto insurance where you only pay for how much you drive. The insurance company will look at your monthly mileage and use a base rate to calculate the cost of auto insurance.
The lesser you drive, the lesser you pay. But it is only good for people with low mileage. If you drive more than 800-1,000 miles a year, then pay-per-mile auto insurance would cost more than general auto insurance. So the best way to find out if you should get pay-per-mile is by looking at your monthly mileage and then multiplying it by 12. If it is over 800 miles, stay with the current auto insurance.
You’ve had an Accident or Traffic Violation
This one is a bit more complicated. Getting in a car accident, or committing a traffic violation such as speeding, rash driving, running through the red light, or a DUI charge will increase your auto insurance rates. This applies to all companies. But different auto insurance companies treat traffic violations differently.
While some companies might increase your insurance rates by 50% for speeding, some only increase it by 15-20%. So the best way to find out which is the best auto insurance company after a traffic violation or accident would be by getting quotes from different companies and selecting the one that charges the lowest.
Prices will rise, but make sure that this rise is as low as possible. If you have accident forgiveness in your auto insurance policy, then do not leave your current car insurance company. With accident forgiveness, you don’t get any price hike in auto insurance rates even after an accident.
When Your Vehicle Gets Old
Liability insurance is mandatory to have, and very important as well. There’s no way of skipping it. But the other insurance policies such as collision coverage and comprehensive coverage are important but optional. This means that you can choose them only if you need them. The problem is, that many people pay thousands of dollars for these policies even if they do not need them.
For example, why would you need collision or comprehensive coverage after your car is over 8 or 10 years old? At this point, you’d be paying much more to the auto insurance company than what you’d pay to fix your car. Old cars can be repaired cheaply.
So why pay monthly premiums for collision and comprehensive coverage, then pay the deductible in case of an accident and make a claim, only to see your insurance rates going up after it? If your car is old, let these two policies go. Speaking of letting go, let’s move to the other point when you should let go of comprehensive insurance.
If You Get a Secure, Covered Garage
Comprehensive auto insurance is great for people who park their cars in an open, unsafe environment where there’s a risk of environmental damage, theft, animal damage, etc. This policy covers the cost of repairs for damages due to:
- Earthquakes
- Fires
- Hurricanes
- Hailstorms
- Projectile damage
- Floods
- Theft
- Vandalism
- Riots
The problem is, it is only valid if your car is parked. So what if you get a nice, safe, and secure covered parking space, like a garage? While there is a risk of damage due to earthquakes, the other risk factors are brought down to nil. So why pay for the comprehensive coverage? Remove it from your policy if you park your car in a closed-off, covered space.
—
