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Overinsuring on Your Car Insurance

Auto insurance is an important commodity; hardly anyone would argue that. For one thing, it is legally mandated virtually everywhere across the U.S., so even if we didn't think it was important, we'd have to get it anyway. But beyond the letter of the law lies the real purpose of auto insurance: to protect the driver, passengers, and the car itself. But although this is undeniably true, yet there are still cases where it is not appropriate to overdo auto insurance and a scaled back approach is more fiscally responsible. Do not throw your money away on auto insurance you do not need.

Liability Insurance for Your Car

Liability insurance is the one area in which it is never advisable to scale back if you can help it. It is always better to have more of this coverage rather than less. As the car gets older, the value of its liability policy does not decline like some other areas of coverage do. If anything, you may opt to dump more money into liability as you pull it out of other areas. If you are used to the payment already anyway, and you do not want to think about what it would be like to face a huge civil judgment without good insurance, then you should do what you think is right. Do not skimp on liability insurance is there is any way you can afford it. A few hundred dollars could save you many thousands in just an instant.

Collision and Comprehensive Insurance

Collision and comprehensive insurance have their use, and they do a great job of protecting new or valuable old cars from property loss in varied circumstances both accident related and otherwise. However, except for in extremely rare cases where cars do not decline in value as they get older (classis or antique cars), it is a waste of money to continue throwing cash at these modes of coverage after a certain period of time. When your car or truck is about four or five years old, start thinking about pulling the plug on collision and comprehensive insurance.

The limits of coverage for these areas of your policy are based on the actual cash value of the car, so they become less useful all the time. At some point it will be clear that they no longer justify the expense with the protection they provide. If you are on the fence but would like to save on this part of your policy, just increase your deductibles and don't cancel out until you are ready. This way you will save a lot of money on your premiums for collision and comprehensive without having to say good bye to them just yet. This can give you a transitional period to start thinking about your next move.

Rental Car Insurance

When you rent a car from an agency, they will try to sell you supplementary insurance to go with the car. In fact, many times the people at the airport desk make it seem like it's not even an option. Well it is an option. If you do have a newer car back home with comprehensive and collision insurance, rental car coverage may come standard as it sometimes does with insurance policies. It can also come as an extra endorsement on a plan. Either way, the coverage included in your rental car coverage that comes with your auto insurance plan (if you do have this coverage) may completely or at least partially eliminate the need for buying insurance at the rental agency. Do not waste money on superfluous coverage. It is bad enough that we have to pay for auto insurance once. Don't do it twice.

If you are unsure whether or not your rental car coverage will cover everything you need, consult the terms of your auto insurance policy. If you are still unsure, call your insurer customer service department. Usually they are happy to help customers on issues like this that are confusing to them.

Rental Cars and Credit Cards

As a side note, come credit cards automatically provide rental car insurance. All you have to do is pay for the car with your car and you are covered. The best thing to do is look into it. Check the terms of your card agreement. Call your credit card company. See if there are limits to the kinds of cars you can rent. Often with credit card rental car coverage the card holder is limited to only choosing from compact cars or some other low priced category of vehicles.

At any rate, there are many easy ways to cut back on your car insurance spending without losing any of your most important coverage. Evaluate your needs and do not buy more than you need.


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