Articles

07/12/2011

Save Money By NOT Buying Car Insurance?

Save Money By NOT Buying Car Insurance?If you noticed the title of this article, you may be thinking, "Why would a car insurance site talk about not buying car insurance?" The answer is simple: one of the most effective ways to keep the cost of car insurance relatively cheap is to make sure you don't buy any coverage you don't actually need. Sure, a new car with a hefty loan requires full coverage - comprehensive, collision, the works - but that old clunker you keep for when the good car is in the shop? You don't need to have comprehensive insurance on that.

Here, then, is a list of five types of car insurance you should not buy:

  1. Personal Injury Protection (PIP): If you have decent health insurance, there's no reason why you need any more than the minimum amount of PIP required by your state. Your liability insurance covers the other parties in an accident, and your health insurance will cover any injuries you receive.
  2. Rental Car Insurance: If your car insurance is a full-coverage policy, you might already have rental car insurance. If not, your credit card provider may cover your rental car. Check with both of these companies before checking the "yes" box for insurance on the rental car agreement, and you'll save a ton of cash. The exception to this is if you're renting a car in a foreign country.
  3. Roadside Assistance Plans: It's usually less expensive and more effective to join AAA, rather than purchasing a roadside assistance package from your auto insurance company.
  4. Mechanical Breakdown Coverage: If your car is either new or leased and still under warranty, there is no reason to pay extra for mechanical breakdown coverage. On an older car, there may be some value in such a plan, but if you are good about periodic maintenance like oil changes and fluid checks, it's really unnecessary. Skip it and save the cash for when you do need to repair something.
  5. Comprehensive and Collision Coverage: On older cars, it simply isn't worth it to pay for this coverage, as the money you might get will likely not be enough to offset the premium or replace a totaled vehicle. Unless the person driving your old clunker is a teenager, skip this coverage. (Teenagers are more likely to have accidents, so keeping collision coverage, at least, may be a good idea.) You can also off-set the need for comprehensive coverage by keeping your car in the garage, and not the driveway or street, at night.

Be aware that by not having some of these types of coverage you may be exposing yourself to a small amount of risk. Sit down with your existing auto insurance policy at least once a year, read it, and then analyze what you really need from your coverage.