Almost every state requires drivers to carry auto insurance. Here are suggestions on how to lower premiums and find room in your budget if you can't afford car insurance.
If you buy a car, you’ve got to buy car insurance, too.
OK, so that’s not entirely true. One state, New Hampshire, doesn’t require its drivers to carry car insurance. The rest at least make their drivers own a minimum amount of liability coverage, though, so you’re more likely than not to have to buy it.
Which is important, because car insurance can be expensive.
Understandably, that causes problems for a lot of people. In fact, it isn’t unusual for people to find they can’t afford car insurance insurance.
If that’s true for you, the first thing you should do is shop around to find the best insurance rates. After all, when you shop your current policy you can save hundreds of dollars a year.
That’s not all you can do, though, to lower your premiums or find room in your budget so you can better afford car insurance payments. Here are some more suggestions.
The best way to ensure you can afford car insurance is to think about it when you go to buy a vehicle. Specifically, you have to plan ahead and be realistic about what you can afford.
Why? Along with your car payment and the cost of maintenance and gas, you need to have enough money on hand to cover your car insurance premiums.
Of course, your car payment will be the biggest factor here. According to Kelley Blue Book, the average “new light” vehicle cost $32,307 in the U.S. in May 2014. Used car prices averaged about $18,000 in June 2014. That’s a difference of over $14,000 between buying a new car rather than a used one.
Not sure how much car you can afford? Interest.com suggests using the "20/4/10” rule:
If you really want to save, and if you can afford it, buy a car outright. That way, you won’t have to deal with all of the extra costs that come along with financing or leasing a vehicle.
This also will lower your payments because you’ll no longer be forced to carry both collision and liability coverage.
Again, the most important thing to remember in this situation is that you should start by shopping around and comparing quotes from multiple insurance companies.
While you do that, ask your contact for a list of all possible discounts. Sometimes insurance companies offer discounts you may not be aware of.
Speaking of discounts, here are some of the most common:
Another way to lower your car insurance payments is to match your state’s minimum levels of liability coverage. This is risky, though, as most of these minimums were set years, if not decades, ago. Both car values and medical costs have risen sharply since then, so you could owe a lot of money if you go this route and cause an accident.
If you’re OK with the risk and you can find an agent who will write the policy, this will drastically cut what you pay.
Whatever you decide to do, make sure you take a few minutes to get a quote and compare rates for the amount of coverage you want.
Still looking for reasons to buy car insurance? Here’s a big one that should do a good job of convincing you.
Just like car insurance can be expensive, so can car accidents. This is especially true if you cause one and wind up on the hook for medical expenses, legal fees, and property damage. The resulting bill can be sky-high.
Also worth considering here is that car crashes are both common and deadly in the U.S. For example, car crashes sent more than 2.5 million drivers and passengers to the ER in 2012. Also, a recent National Highway Traffic Safety Administration study found that accidents impacted Americans to the tune of $871 billion in 2014.
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