Protecting My Car

A quick internet research will reveal numerous ways of lowering auto insurance rates. However, you shouldn't take all of these tips at their face value; some of them can actually mess up with your coverage or leave you in a financial rut when your car is damaged.  Here are a few examples of tips you shouldn't apply without careful evaluation:

Raising the Deductible

In a typical car accident case, the car owner pays a small portion of the damage, and the insurer takes care of the rest. The car owner's portion is called the deductible and it only applies to collision and comprehensive coverage. Car insurance policies have minimum deductibles, but you are usually free to raise it to any level with which you are comfortable. The insurer will reciprocate by lowering your rates.

However, this also means you need to have some emergency money that you can dip into whenever your car experiences damage. Otherwise, you may be stranded when your car gets damaged, and you can't raise the amount for the deductible.

Carrying Low Liability Coverage

Liability coverage is required by state laws, and each state has a minimum coverage it requires from each motorist. The good news is that you have the option of increasing your liability coverage; the bad news is that it will increase your rates.

This is why some people will advise you to carry the minimum coverage so that you don't pay increased rates. However, the state minimums are usually low and don't offer adequate protection. For example, some states' minimums are as low as $30,000 for all injuries incurred in an accident, which may not be enough if it has to be shared by several people. Don't forget that the accident victims can sue you for the rest of their damages if their injuries far exceed your liability coverage.

Carrying Only Liability Coverage

Another popular tip for lowering auto insurance rates is to eliminate all forms of coverage and only buy liability coverage, which is a state requirement. Again, this will reduce your coverage rates, but at a cost. This is because you will have to use your own money to repair your car whenever it is damaged. You can imagine how difficult it may be if you incur a serious damage that requires thousands of dollars, and you don't have the money.

It's not that you should never use these methods; there are situations where they can help you enjoy low coverage rates. However, you need an evaluation of your personal circumstances to ensure you aren't chasing low rates at the expense of other essential considerations.