Car insurance – Is your car over-insured?
You signed the contract of car insurance with your auto insurance agent. Now, it is time to renew your insurance policy. However, you also start wondering if your current monthly premiums are the result of getting too much insurance on your car. You wonder if you are over insured or not. To find the answer for your question, you should read on this article.
Before getting started, keep in mind that driving a vehicle which is over-insured is preferable to being uninsured. In the U.S, every state (except for New Hampshire) requires the drivers to have liability coverage, paying for injuries to the passengers and damages to other property and vehicles as they cause a certain accident. Besides, some states even require extra forms of coverage in order to legally get on roads. If you fail to carry those minimum amounts of insurance, you may suffer from penalties that range from blemishes on the driving records to fines. Additionally, causing an accident with no car insurance will be crippling in terms of finance.
Nonetheless, the amount of liability coverage that the official law requires may be lower than the amount you have to pay for every month. For instance, the state of Florida requires motorists to carry $20,000 and $10,000 worth each of the bodily injury liability coverage and property damage liability coverage that means the car insurance companies pay those amounts for the claims originating from the accident that you caused. In case you are insured for $300,000 and $50,000 each of bodily injury liability and property damage, you may decrease your own coverage and pay for the lower premium.
However, it is not always a good idea because it also depends on the financial situation of your own. For example, in case you cause a certain accident and the ruins caused exceed your own coverage, then a lawsuit might target your financial wealth – your salary, your home, some of your investments in order to make up a difference. Yet, if you have very few or even no assets or you have low salary, you could get by with less coverage.
So what are types of car insurance coverage you may not need on your vehicle?
Should You Drop Some Of Coverage?
You could totally prevent your vehicle from being over-insured by eradicating redundancies in your current insurance policy. For instance, personal injury protection coverage spends for funeral and medical bills originating from car accidents regardless of the person at fault and is forced in just some states. However, if the driver and the passengers already have life, health, and disability policies and he knows they are likely to cover those expenses, then he should buy the minimum amount of personal injury protection coverage or consider removing it if the laws of your state allows. The insurer may also push you to get extras such as roadside assistance, if you possess the American Automobile Association membership or something similar, then these services should be already covered.
In case you are driving an old vehicle with collision and comprehensive coverage, you can drop them. These forms of car insurance make sense for those newer car models. If your car is leased, then they may be required.
It is possible to get involved in the situation of over-insured when you are using a vehicle of a rental. Look at the insurance policy of the rental company and discuss it with your current car insurance policy. Perhaps, you do not need the addition coverage which the clerk is trying to sell you, and you may be covered by your personal car insurance policy or through the company that you use to reserve as well as pay for that rental. You should confirm your status of insurance beforehand and if you are unsure, you can buy rental coverage anyway. As mentioned before, getting over-insured is still better than having no car insurance at all.