Owning a car is an expensive investment and car insurance is a huge factor in that. There is a huge difference in insurance costs depending on where you live. In Michigan the annual cost for car insurance is $2,446, while the average cost for North Carolina is $385.
Your rate is determined by a number of different factors raging from the number of accidents you’ve had to the number of uninsured drivers in your region. Some customers have found that they can lower their premium by dropping their coverage to the minimum their state requires. Unfortunately, this can end up in a precarious situation.
Ultimately, having the minimum coverage doesn’t end up paying off. In many states, nearly a quarter of drivers don’t have car insurance. What this means is that if you have minimum coverage, even the smallest fender bender is typically more than what is paid in damages.
The only time signing up for minimum coverage make sense are if your car is old or you don’t have assets that would be at risk.
If your car is old and has little value, you might be able to do without collision or comprehensive coverage. The downside is that you have to have enough cash available to deal with the fallout of an accident, whether that be repairing or replacing your vehicle.
If you don’t have any assets, then it’s possible you could go with low insurance coverage as an option, since if you’re found to be at fault in an accident you could be sued putting your home and assets in jeopardy.
Unless you have enough cash available to pay for an accident, a tree falling on your car, or routine maintenance, both of these options are dicey. Considering how expensive the upkeep of a car can be, minimum coverage may seem like a good idea, but the better bet is to look for other ways to lower your insurance cost.
If you have any questions, contact us for assistance in finding the right car insurance policy for you.