Car insurance is a legal necessity and a sensible investment. However, millions of people purchase more protection than they need. Is your car over-insured?
One possible way to save money and stay safe is to reduce or remove your comprehensive coverage and collision coverage. Of course, this would only be worthwhile for older cars that have lost much of their original value. You can get an estimated value for your car from NADA Guides or the Kelley Blue Book. If you continue to hold insurance and your car is totaled, that’s about the figure you’ll receive from an insurance company. People generally recommend dropping comprehensive and collision coverage once the value of a car falls to somewhere between $1000 and $4000.
Another way to save is on car rental insurance. Car rental agencies offer optional insurance, but chances are good that if you rent a car within the United States, you’ll be buying unnecessary coverage. Your regular auto insurance policy will probably apply. If you’ve dropped some sort of coverage from your regular policy though, you might want to purchase supplemental insurance for the more valuable rental car.
Finally, a third way that people overpay is by choosing traditional plans instead of pay-as-you-go programs. If you tend to drive on relatively safe roads at off-peak hours, and/or drive relatively few miles per year, then a pay-as-you-go plan could save you up to 50% on car insurance. These programs are tailored to your specific commute.
For more money-saving tips, see our articles about auto insurance discounts and saving money with teen drivers.