Saving Money By Lowering Coverage

I read an article today published on MSN money that really bothered me; it was about lowering your auto insurance by dropping or lowering coverage limits.  Although I understand in today’s tough economic climate the need to save money; I just want to reiterate what Robert Passmore from the Property and Casualty Insurures Assciation of America said, which is essentially, by lowering or dropping coverage from your auto policy, you are opening yourself up to substantial risk.

The article suggested dropping under and uninsured motorist coverage from your policy.  To me this is the most important part of coverage, next to liability, on your policy.  Your auto policy can be broken down into three areas which are:

1. Liability: This is what covers everyone else if you cause an accident.  It covers their medical and pain and suffering, known and bodily injury and their vehicle, knowns as property damage.

2. Comprehensive and Collision coverage: This is what covers your vehicle.  It protects your vehicle against damage done by either yourself, or another driver who may not have insurance.

3. Underinsured and Uninsured Motorist Coverage:  This coverage protects you as the driver of your vehicle should the other driver not have any, or, not enough insurance to cover your injuries and pain and suffering.  Most people would argue, “well I have good medical insurance for that,” which is great.  However, what happens if you can’t go back to work right way?  What if you are laid up in bed for over a month, two months, or three months?  Who pays your mortgage while you are away from work?  What about your other bills you can’t pay because you miss work due to the fact that you can’t move becaue of your injuries?

Don’t think this happens!  It does, every day.  It has happened to my very own clients.  I have a client who has been out of work for a year now when he was hit by another driver that fled the scene.  He did not have uninsured motorist coverage and he was injured so severely he has not been able to perform his work as a plumber.  He has basically had to live off his wife’s meager income and they have had severe financial difficulties.  Had he carried uninsured motorist coverage in the amount recommended of 100/300, there would have been up to $100,000 for him to help out.

Cutting expenses is sometimes a necessity but I would strongly recommend you cut other expenses first before you start to cut auto insurance coverage.

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