Everyone wants to save money on Car Insurance, right?   Well that’s what nearly every insurance TV advertisement promises, and while saving money is nice, it’s also important to know what you are buying and trying to protect.  Car Insurance doesn’t just protect your car in case it’s damaged by an accident or something else. Car Insurance can also protect your future!

When insurance companies promote saving money on insurance policies, it attracts new prospective customers because insurance is often perceived as a necessary requirement to be able to drive your car.  The promise of savings is powerful and effective.  Sometimes what happens is that savings on your insurance comes from reductions in coverage that you may not want to reduce! For example, let’s say you have a Car Insurance policy with a liability limit of $500,000.  This is strong limit for most drivers because it protects you from the bodily injury and property damage injury that you could inflict on others with your car.  But when you call to save money, the agent explains that the minimum requirement for liability insurance is $15,000/$30,000/$5,000 and that by dropping to the minimum would save you $200 every six months!  That’s a savings of $400 per year – seems attractive, right?

Here’s the catch – if you are driving and rear-end someone as traffic comes to a sudden stop and you can’t react in time, you will be liable for damage to the car in front of you (at minimum) and also for any injuries that occur.  So, if you rear-end that $100,000 dollar Tesla and cause $20,000 in damage and $30,000 in injury (both may be low numbers by the way!), your original policy would have had plenty of coverage to pay for that scenario, but your policy with minimum limits would not.  You would on the hook for tens of thousands of dollars!  Your future earnings may be garnished to help pay for the insurance shortfall.

Next time you are tempted to save money on car insurance, talk to an agent you trust.  It’s the right way to buy car insurance.

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