How Much Auto Insurance Do You Really Need?

• Author: Michael Bordonada
• Posted: 2024-10-25

If you live in the United States and have watched any sort of television over the past decade, then you can probably recite a few auto insurance commercials by heart. You know that you can save 15% or more in 15 minutes by switching to Geico. You probably know that you're in good hands with All-State. You likely even know about Mayhem's many mishaps and that Flo's family looks an awful lot like her. What you might not know, however, is that most of these auto insurance packages are utterly useless to you and you just end up paying far too much money. With inflation at record highs, grocery prices still spiking, and fuel costing a small fortune, millions of people are forced to pinch their pennies wherever possible. If you're looking for a good area to cut back on your spending, then you might want to think about redoing your car insurance policy and going with something a lot cheaper. One thing you can say: At least you know there's a lot of competition out there to check out! Insurance companies are as prevalent in America as fast food restaurants.

The question here becomes: How much auto insurance do you really need in your life? There are six main types of policies. Liability; comprehensive coverage; collision coverage; uninsured motorist coverage; personal injury protection; and medical payments coverage. Every single type of policy you'll find, no matter what sort of name they have, is a take on one of these six types. Believe it or not, a lot of people end up with three or more types of insurance, because they bought into some plan with a fancy name; and thus they end up paying a lot more for their monthly premiums than they need.

In almost every state in America, you're going to need some type of insurance to legally drive around. For most people, this means at least getting liability coverage. Basically, liability coverage means that your insurance pays out if you happen to be liable (responsible) for any type of accident. Though once you get up into things like medical payment insurance and comprehensive coverage, you're just paying a small fortune for things most drivers never need.

The counter argument to this, of course, is that if you ever do get unlucky and need that much insurance, at least you have it. This is an understandable take. It's easy to see why many think that way. However, people are finding it much harder to live in this economy, and thus cancelling some of those options may help you save money every month.

Your Mileage May Vary

No one is the same here, and so no one is telling you to go out and immediately cancel your insurance policy. The idea here is to go over what you have with a fine-toothed comb and see if you can afford to cut back. You might have a different situation than most and actually need a full suite of auto insurance coverage, in which case you should definitely keep it. But if you're one of the many millions of people who don't drive a lot at all and are very low risk, then perhaps losing that comprehensive and collision coverage, and rolling back to only liability coverage, is a much better move for you that's going to help you save a lot of money in the long run. The general idea, again, is to take your personal situation and policy into account. You would be surprised at just how many people are paying an expensive premium and do not need that much auto insurance.

Avoiding the Extras

Avoiding all of that extra coverage is just a great way to save. Just because Flo gives it some fancy name in her Progress commercials, or you think the lizard is cute, is no reason to buy a policy like you would a cheeseburger because it looked good in the commercials. That's what these large corporations are banking on, literally. They hope that their advertising allows them to up-sell you on a huge package, when you could probably get by on something for half the price of what they want you to pay.

Just keep this in mind the next time that monthly statement shows up. There are likely a few ways that you can cut back on your payments while still keeping the quality insurance you need to drive.