Everyone who has a car will need car insurance as it’s required by the law. But every state has its requirements for how much insurance is necessary. You might require bodily injury liability coverage of $15,000 per person and $30,000 per accident in California, but those numbers rise to $25,000 and $50,000 in Colorado, for example. Meanwhile, residents in Georgia don’t need personal injury protection coverage, but Florida and Hawaii drivers do.
The general rule for low-income households is to keep to the lowest car insurance coverage level possible. This effort means sticking to the minimums that are acceptable in your state.
You can review your car insurance coverage level and lower it to keep you from spending more on insurance than necessary. You may find that you don’t necessarily require as much coverage in your policy as you might assume.
How Does Lowering Your Coverage Level Help You Save Money?
Every state has its own range for how much you could spend on car insurance each month. Many factors can influence your spending, including your past driving record, the type of vehicle you own, and how often you drive.
But the total amount of money in your policy will often have a more substantial impact on what you’re spending. A good example comes from Kentucky, where you’ll require bodily injury liability coverage of $25,000 per person and $50,000 per accident plus $25,000 in property damage liability coverage.
Estimates state that it costs about $60 per month for the minimum amount of coverage in Kentucky. Meanwhile, it can cost $200 or more for higher coverage levels. These totals mean you could spend anywhere from $720 to $2,400 per year for insurance in the Bluegrass State.
The savings you’ll get from using the lowest possible coverage level in your area can be dramatic. This point is especially valid if you don’t drive too often.
Do You Drive That Often?
The next step for saving money on car insurance is to look at how often you drive. Many low-income families don’t drive often as they might have jobs closer to their homes. Some families may also plan their trips and spend less time driving because they don’t want to spend lots of money on fuel.
You can review how often you drive by checking on the mileage totals in your car insurance policy. Your policy is often updated to reflect the total mileage on your vehicle. You could potentially spend more on insurance if you drive more often as you’re putting yourself and others more at risk.
General estimates from most insurance companies state that anyone who drives 14,000 miles a year or greater is a high-mileage driver. People who use their cars often are more likely to spend extra and may require extra insurance coverage.
But if you don’t drive too often, you can reduce your insurance coverage level since you’re not as much of a risk. Since you don’t get out on the road as much, you can stick with the lowest possible coverage.
The savings you get from reducing your coverage will be compounded further by how you’re driving less, but the amount you save by driving less often will vary by state. People who drive 7,500 miles a year spend about 5 to 10 percent less on insurance than those who drive 15,000 miles each year.
This point is especially relevant in places where traffic is more prominent. For example, car insurance rates are very different in assorted parts of Nevada. A person in a rural part of the state like Caliente or Orovada will spend less on insurance than people in urban spots like Las Vegas or Henderson. The savings you’ll get for driving less will be greater in a metropolitan area where accidents are more likely to happen.
Do You Need Comprehensive Car Insurance?
Your next point to spot involves the forms of coverage you have, including comprehensive coverage. One common problem low-income families often deal with involves adding comprehensive coverage to their insurance policies.
Comprehensive insurance is an optional program that protects your vehicle from damage caused by many non-collision events. These issues include weather-related accidents, vandalism, theft, fire, or glass damage.
Low-income families can benefit from comprehensive insurance because their vehicles might be in spots where theft or other outside issues might be prevalent. It’s also helpful in rural areas where tornadoes and other severe weather risks may be more dramatic.
But the total cost of comprehensive insurance can be high. You could spend $100 to $400 per year on comprehensive coverage for your vehicle.
So, do you need comprehensive car insurance? The best idea is to review the market value of your current vehicle. You might find the market value has dropped to where the cost to repair the vehicle following damage might be higher than the car’s value.
You can contact a database for information on what your car’s value is worth. The Kelley Blue Book is one of the most reliable resources. You can use the KBB to check your car’s approximate value based on the year, make, model, mileage, location, and condition of that vehicle.
A Final Note
Car insurance isn’t something you want to think about that much, but it’s critical for you to see how much you’re spending on insurance each month or year. You might be surprised at how much you pay for it and the coverage amount you have might be even higher than you expected.
Be sure you look at your car insurance coverage level to see what you’re spending money on. You might be able to reduce your insurance coverage total or even eliminate optional things in your policy. Reducing how much you drive could also help you keep your costs down.
Remember that car insurance is a mandatory expense. Knowing what your policy is like and how you drive can help you determine what you should be spending on your insurance.