Focus on Your Car Insurance When Cutting Your Expenses

by: Thomas Ajava

To say it has been a rough year for most people is a minor understatement. The name of the game these days is to cut expenses wherever you can. One place most people do not look, but should, is their car insurance. You can make a few changes that will really drive down the price.

Insurance is a subject much like taxes. You don't really want to deal with it, but you know you have to. I own life insurance, but honestly don't really understand how it works other than to know it will pay out money when I die to the person I designated. Other than that, I just send in a check every month and hope for the best.

Most people view car insurance the same way. They ask for "full coverage" and then go for the lowest quote they get. What most people don't understand is car insurance is actually a collection of different insurance coverages. You don't need all of them. The ones you do need do not really require all the coverage you might be paying for. If you can get things under control, you can slash your car insurance premiums and give yourself some serious budgetary relief.

The first issue to consider is the coverage you have. You need liability insurance because this covers you for third party claims. Put more specifically, this covers you for the repairs to other cars and medical claims if you cause an accident. Whatever you do, make sure you maintain liability coverage.

What about comprehensive coverage? Well, you might need this, but you might not. Comprehensive coverage takes care of the cost of replacing or repairing your car. You need it if you drive a new or old car. The question is how much coverage do you need? If you are driving a 5 year old Honda with a blue book value of $6,000, you probably don't need $50,000 in comprehensive coverage. Cut the coverage down to $10,000 and your premiums will drop.

Car insurance comes with coverage for medical bills should you be involved in an accident. Millions of Americans don't have health insurance, but what if you do? There is little reason to pay for medical coverage on your car insurance if you already have independent health insurance. If this is the case, cancel the medical coverage on your car insurance and save big bucks.

The final step with your expense cutting has to do with your deductible. The deductible is the amount you are responsible to pay before your car insurance kicks in. Most people have it set at $250. You should raise the deductible to $1,000. Your premiums will plummet because it is far less likely the insurance company will have to pay any claims. To avoid problems, make sure to save up and set aside $1,000 for any repairs.

You can slice car insurance premiums by 20 to 30 percent with these simple steps. In some cases, the discount will be even more. That is some serious money and we can all use every buck we can find these days.