Full Coverage Auto Insurance Is Often the Better Choice

For a long time, insurance premiums were stable and in general people weren’t as worried about costs. Lately, with inflation affecting costs, companies often had no choice but to increase their prices. As usual, many of them were probably looking for a good excuse to adjust their rates, which were in check for some time. Given the chance, some of them may have actually gone too far, especially with higher risk portfolios.

Is Dropping Coverage a Solution?

Inflation increases uncertainties in the marketplace that result in certain reactions. When the companies are pressured with increased repair expenses and claims as well, they become risk averse and want to offload some policies or hike rates. Generally, the first group of policyholders that get the brunt of aggressive pricing are in the low-income brackets and living in poorer communities. Also, those with recent claims and dangerous vehicles get their share as well.

This situation may force people to think of giving up some coverage to lower costs. People should really think carefully before acting hastily. Ironically, these drivers need better insurance than most because they don’t have much spare money to deal with total loss of their automobiles. Most people are highly dependent on their own transport and losing it may make it difficult to get by.

What Are the Auto Insurance Options?

Legally, motorists are required to buy state minimum liability coverage. This option may appear to be more economical but there is a good reason for it. If the vehicle owned is not worth much money this choice can be attractive. Otherwise, it may cause serious hardship in case of unexpected losses. Also, second-hand car prices have gone up a lot lately that it may be worth more than people think.

There is a choice to insure your own cars, as well as increasing the minimum limits. Adding Collision and Comprehensive to Liability makes it full car insurance coverage. In simple terms, a full policy pays for any damage that may come to your automobile in case of collisions (regardless of fault), fire, storm, water damage and so on. They also pay for damages and injuries caused to third party drivers, other road users and property owners.

What Are the Possible Cost Implications

Now, the big issue is that most companies apply punitive rates for people who just want to buy a basic Liability Only policy. Some don’t even entertain the idea of selling them. There are several reasons for this bias. First of all, such a choice is often entertained by motorists in the lower end of the earnings spectrum and they tend to claim more due to not having enough money.

Most importantly, these policies are so tight that in any incident they reach their maximum limit. For this exact reason, underwriters apply higher rates to the initial portions and they start coming down fast as the amounts increase. Let’s compare a policy with $30,000 liability coverage against the one with $1,000,000. Interestingly enough, both policies may have only slightly different claim expectancy due to the fact that most damages and injuries end up in the lower end of the equation.

In other words, because you asked for a $1,000,000 bodily injury limit does not mean that they will pay this much as soon as someone gets injured. And for the same reason, you should not worry about it costing you an arm and a leg. However, it is always nice to have the large protection for an extra peace of mind. You never know what happens on the roads.

What Is the Solution?

Giving up very useful Collision and Comprehensive protection for your own auto shouldn’t be a lightly taken decision. Remember that there are more companies offering cheap full coverage auto insurance quotes than basic options. The solution is to use this fact and find the best value for your money in order to get what you really need.

This is truer for policyholders who have not claimed a cent for a long time. They are low risk and sought after and can switch companies without much difficulty. They should start with getting at least three quotes and see where they land. They can get a few more once they know what is the figure to beat. Hopefully, people are convinced that they don’t have to put up with increased renewal premiums and do something about it.