Sunday, March 18, 2012

Why Not Cancel Auto Insurance to Save Money

Auto insurance can be expensive, and you may be tempted to drop your coverage as a way to save money. However, there are legal and financial reasons why dropping auto insurance is not a good idea

Auto insurance can prevent financial hardship. If your vehicle is totaled in an accident, for example, you would have to pay for a new vehicle out of your own pocket. If you are at fault in an accident and are sued, your auto insurance can protect you against the loss of assets.

Potential Pitfalls
In all 50 states, you are required by law to carry at least the minimum mandatory insurance coverage if you own a vehicle. If you are caught driving without insurance, you could be fined, lose your license or possibly even spend time in jail.

If you're having difficulty affording your auto insurance coverage, consider obtaining quotes from other carriers as premiums can vary greatly from company to company. You could also explore dropping unnecessary coverages. For example, if your vehicle is older and of little value, you can consider dropping physical damage coverage (comprehensive and collision) as a way to reduce premiums.

If drivers are involved in an automobile accident and don’t have the proper coverage, paying for injuries, property damage, and even a lawsuit can cause great financial hardships. In some cases, a forced insurance policy can be placed by a financial institution if a consumer fails to comply with their loan agreement.

If drivers are looking for a way to save money they should speak to their provider or agent and explain their specific financial situation to them to see if a more affordable auto insurance policy can be obtained rather than canceling coverage.


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