How to read liability limits |
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Example: 100/300/50 translates to $100,000 in bodily
injury coverage per person, $300,000 in bodily injury coverage per
accident and $50,000 in property-damage coverage per accident. |
If you're looking to trim your expenses as much as possible, you might be eyeing your
insurance bills. There are many ways to tinker with your
car insurance coverage to chop your premium down to a bare minimum. You could call your insurance company and:
- Drop your liability limits to the minimum level allowed by state law
- Drop your collision and comprehensive coverages
- Keep collision and comprehensive but increase your deductible to $1,000 or more
- Drop your uninsured motorists (UM) coverage
How low can you go? You can likely chop your car
insurance bill in half by dropping your liability limits from
"recommended" limits of 100/300/50 down to 25/50/10, dropping collision
and comprehensive, and dropping UM (see chart below for average
savings). Many states have minimum liability limits of 25/50/10, but
others are higher or lower. See the minimum levels of car insurance you are required to buy.
How low can you go?
Average national insurance premiums |
| Vehicle |
Coverage of 100/300/50 with comprehensive & collision, UM included |
Coverage of 25/50/10, no comprehensive or collision, no UM |
Savings |
| Honda CR-V |
$834 |
$426 |
49% |
| Honda Odyssey |
$786 |
$338 |
57% |
| Chevy Tahoe |
$878 |
$420 |
52% |
| Ford F-series pickup |
$905 |
$438 |
52% |
| Toyota Camry |
$885 |
$412 |
53% |
| Chrysler Town & Country |
$768 |
$355 |
54% |
| Audi A8 |
$1,268 |
$426 |
66% |
Source: Insure.com research.
Average national premiums calculated for a 40-year-old single male
driver. Policy limits of 100/300/50 assume a $500 deductible. Model
year 2004 was used for all quotes because collision and comprehensive
are often dropped on older cars. We used states with liability minimums
of 25/50/10; some states require higher minimums.
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But remember this: Dropping your car insurance to a bare minimum opens you up to substantial risk.
"You want to consider that very carefully. You’re
trying to protect the assets you have," says Robert Passmore,
spokesperson for the Property Casualty Insurers Association of America
(PCIAA), an industry trade group. If you have a house, savings and
investments, they could be put at risk if you cause a large accident
where damage exceeds your insurance limits. And if you've dropped your
UM coverage, a driver with no or inadequate insurance could wreck your
finances too.
Passmore notes that the most expensive coverage
dollars are the first dollars. In other words, $100,000 in coverage
does not cost twice the price of $50,000 in coverage. "It’s like
getting a volume discount," says Passmore.
Another quick way to save money is to comparison
shop and change companies based solely on price. Before you leap to
another insurer, check its track record. You won't receive more value
for your insurance dollar if your new company has poor customer
service. Many states release "complaint ratios" showing the relative
number of consumer complaints against each company. Insure.com has contact information for state insurance departments.
