By Tom O'Leary
In Part 1, we detailed
the first five strategies on how to cut your car insurance costs. In Part 2, we
show you the second five
STEP 6 - Review,
Change or Cancel No Fault & PIP
(Personal Injury Protection)
No-Fault Coverage, and
it's Twin - PIP - started out as great idea's. Your premiums were actually
going to be lowered. Then, your State Politicians got involved (at the urging
of Insurance Lobbyists, of course) and mucked it up.
You see, no-fault
insurance coverage was originally intended to have each individual's losses,
covered by their own car insurance company - no matter who was at fault
Today, in many States,
car insurance companies are making a ton of money on no-fault because the
insurance companies convinced State law-makers to make
"modifications."
Today, because of the
these changes, car insurance companies have actually used the no-fault laws to
reduce payments on a claim made by a customer, instead of reducing car
insurance premiums as it was supposed to do
So, premiums keep
going up-and-up and insurance companies end up paying less for claims - Someone's
getting rich on that deal....and it's not you
And to make matters
worse, some States (with really, really talented Insurance Lobbyist's) also
require an additional premium be paid on top of the no-fault premium. This
beauty is called Personal Injury Protection (PIP)
PIP is a
"wide-blanket" of coverage and can provide Collision Coverage,
Hospitalization, Social Security Disability, Workers Comp, Personal Disability
Insurance & Life Insurance
The problem with PIP
and what it covers is....
You already gave most,
if not all, of these coverage's anyway, don't you? So, you're paying twice
So, you need to do a
couple of things
Google "minimum
levels of required auto insurance" to see if No-Fault Insurance and/or PIP
Is required in your State
Then, check your
policy. If it's not required by your State to have No-Fault/PIP Coverage and
it's on your policy - cancel it. If No-Fault/PIP is required by your
State....take the absolute minimum. Here's how
If you must have
No-Fault/PIP, ask for and get a deductible from your car insurance company
STEP 7 - Cancel
Medical Coverage
Medical Coverage, on
most car insurance policies, is a promise to pay "reasonable" medical
expenses for anyone who is riding in your car should you have an accident...as
well as anyone in your car should it get hit by someone else
Cancel it. You don't
need it
Why is that you say?
Well, medical coverage as part of your car insurance policy is a duplicate of
your own
- Medical Plan; - Any
Life Insurance Coverage you might have, as well as; - The Liability Sections of
almost every car insurance policy written in the U.S
Think of it this
way....Do you have a Health/Medical/Hospitalization Plan through work or an
Association you belong to
Then why are you
paying premiums for Medical/Hospitalization Coverage on your Car Insurance
Policy
Here's what's going to
happen when you tell the car insurance company or Agent that you "Don't
want the Hospitalization/Medical Coverage." You're going to hear very
slick "scare tactics" to help change your mind
The insurance company
employee will say "Well, if you're in an accident, and it's your fault,
who's going to cover the medical bills for any injured passengers in your
car
Here's your answer.
Your family is already covered by your Health/Hospitalization Plan. If anybody
else is in the car and they're injured - they're covered by your Bodily Injury
Liability coverage that you're already paying for....and their own
Health/Hospitalization Plan
So go ahead - save
some more money and get rid of this coverage
STEP 8 - Cancel Death,
Dismemberment & Loss of Sight
Do you have any of
these coverage's on your existing car insurance policy? If so - cancel them
And if you're a first
time car insurance buyer or, just looking at getting several car insurance
quotes, don't let anyone talk you into them!
Why
Because, these
coverage's are an absolute waste of money. Most of these optional coverage's
are simply "glorified" life insurance policies with ridiculous
provisions and horribly overpriced premiums. If you need life insurance, make
it a separate Insurance Policy
STEP 9 - Cancel The
Extras
Do you have
"Roadside Assistance" or "Rental Car Reimbursement" on your
policy? If so, cancel them
And again, if you're a
first time insurance buyer or getting a few car insurance quotes, don't bother
with these coverage's
Why? Because they're
severely overpriced, are rarely ever used, and limit what you can and cannot
do
For instance, some
rental car reimbursement" coverage is almost $100 a year for each vehicle
on your policy. So if you have two cars, you'll spend almost $2,000 on rental
car coverage in the next 10 years - and likely never even use it
And roadside
assistance? The piece-of-mind it offers gets trampled by the premiums the car
insurance companies want for this coverage. Roadside assistance is a good idea.
But use AAA for a cheaper solution
STEP 10 - Terminate
Comprehensive & Collision Coverage On Older Cars
If you have an older
car - by that I mean one that's worth less than $2,000 wholesale (the amount a
car dealer would give you if you were trading it in) cancel any Comprehensive
and Collision Coverage you have or decline that option when getting a car
insurance quote.
Here's why. If an 8
year-old car and a brand new car have identical damage, the cost to repair both
will be identical as well, even though the 8 year-old car is worth
next-to-nothing.
You see the cost of a
bumper and fender are the same - whether it's for a brand new car, or one that
is 8 years-old. That's why your premiums don't go down as the value of the car
goes down. Your payments remain almost the same, year-after-year-after-year
But, the bottom
drops-out of what you'll be able to collect on that older car. For instance, if
your car is "totaled", your insurance company will only pay you the
wholesale value of your car
So, let's say your car
is worth $1,000, but the total damage is more than $4,000, the insurance
company is only going to give you a check for $1,000....minus your deductible,
of course
So you might end up
getting $500 back. Sounds like a lousy deal....but that's how it works.
So, the rule-of-thumb
is this - cancel your comp & collision coverage when your vehicles value is
less than $2,000....or you'll be throwing your money away
Okay - you've jotted
down some notes and are ready to make some changes to your car insurance
policy. So pick up the phone and start slashing your premiums
Tom O'Leary is an
Automotive Portfolio Analyst based in Cincinnati, Ohio and Publisher of http://www.mynewcarpurchase.com, a consumer focused web site that assists
with buying a new or used car, cheap car insurance
quotes and
finding cheaper car & truck financing
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