Everyone experiences a financial crisis at some point, some more often than others. When that time comes, the first thing people seek to do is find ways to cut monthly budgeted costs immediately, find some things around the house to sell on eBay or Craigslist, and cut out all unnecessary spending, and that often leads to making critical insurance choices that will hurt them in the long run (and possibly in the short term.) It’s not that people really think of auto insurance as “totally unnecessary,” but rather, some think of it as “optional for the moment and use as needed.” In a world where a dollar doesn’t seem to go far and where we all want things as quickly as possible, there are actually a few quick ways you can safely cut down on the cost of your auto insurance premiums. If you’re in a hurry like most of us, you’ll find that doing the following three things can probably be done faster than cancelling a policy entirely.
1. Completely remove physical damage coverage (Collision/Comprehensive) and Loss of Use (Rental).
If you still have a loan on the car, your lienholder might become alerted by your cheap auto insurance company it’s been removed and may add it to your monthly car payment. If you are close to paying the car off, you might be able to negotiate with them a way to remove it.
If they are not listed as lienholder on your cheap auto insurance, you might be able to take it off without letting them know, but then you are in danger if you have a collision or a non-collision loss to your car of having to pay for a loan even though you no longer have a vehicle.
2. Lower extra limits like UM/UIM, Med Pay, and PIP.
You may not want to do this if you don’t have health insurance. However, if you do have private health insurance coverage, you can knock these down to minimum or remove them so that you can drop the costs for now. You should consider them to be extras you can do without for the time being and you can always add them back in later.
3. Look For Missing — and Extra — Pieces
You’d be surprised to learn how many people are paying for household drivers that haven’t lived in the house for years. Look over your auto insurance policy and be sure everything is accurate. If you have lost your job, you can also switch the usage on your car to pleasure use, which may give you cheap auto insurance premiums. Also, ask about affinity discounts — an alarming number of people are eligible for a discount between 3%-7% just because they belong to a certain club, are an employee at an affiliated company, or are alumni from a particular college. Each insurer has a different list of eligible organizations or employers, so you’ll need to ask the insurer about it, because odds are, they won’t bring it up if you don’t.
One note of caution is that you should never view auto insurance as optional. You will end up in a worse situation if you cancel your insurance unless you are planning to sell your car and walk for a year or two. Instead, compare and find better ways to get cheap auto insurance premiums without leaving yourself exposed to major violations or lawsuits. Any lapses in coverage also cause you to pay as much as 200% more when you do get insurance again, so the immediate gratification of cutting the expense out completely, if only for a short time, will end up costing you greatly in the long run. Instead, just trim the crust and when you’re ready and when it makes sense, opt for all the works.
Follow Desiree on Twitter @DesireeBaughman.