For many households, staying afloat means cutting costs when finances get tight. And that is exactly what happened in the recession. At the peak of the the recession, many people dropped their levels of coverage on insurance and assumed more risk for themselves, according to a new study conducted by analytics firm, Quality Planning.
The greatest number of those who dropped coverages in the timeframe of the study, which includes data collected from 2006-2010, did so on cars that were 10 years or older.
Dropping comprehensive and collision insurance on older cars is one of our 10 steps to lowering car insurance costs, and that’s exactly what the majority of these consumers did. The study indicates that a full 63% of cars that are more than 10 years old are now insured with their state’s minimum liability coverage, up from 53% when the study began. Dropping these coverages saved consumers an average of $229 per car annually.
While consumers may have been willing to increase their risks significantly with older cars, the same cannot be said for those who bought new cars in the same period, although they too did slightly increase their risks by raising the amount of their deductibles, which is yet another of our 10 steps.
While new car purchasers did purchase full coverage for their autos, including liability, collision and comprehensive insurance, there were significant increases in those who were willing to choose a higher deductible amount on those coverages. Those choosing higher deductibles ($251-500 and $501-$1000) increased between 1.6 and 4.9 percent per year during the study.
Having the right coverage at the right price is important. And most people have been with their current auto insurer for a decade or more. While both dropping coverages and raising deductible amounts are easy steps to lower your car insurance costs, sometimes the easiest and most effective one is to shop around and obtain quotes from other companies.