When you are trying to find ways to cut expenses in your budget, it can be tempting to consider cutting back on auto insurance coverage. After all, auto insurance rates are based on the types of coverages you have and the amounts of coverage. If you cut back on some of the types, you will certainly save money on your policy; however, saving money on this expense could put you in a risky situation. Here are three good reasons you should not cut back too much on your auto insurance coverage.
You might not have coverage when you need it
Cutting back on your policy could land you in a position where you do not have coverage for damage to your car that you had before cutting back. For example, if you decide to save money on your auto insurance policy by canceling your comprehensive coverage, you would have to pay for all the damages you experience if you ended up hitting a deer, having a cracked windshield, or dealing with hail damage to your car. Additionally, if you decided to remove the collision coverage on your policy, you could be out a lot of money if you cause an accident that leaves your car mangled up.
You might be in a bad situation if you encounter an accident with an uninsured driver
Secondly, reducing your coverages could cause major problems for you if you ever get in an accident caused by an uninsured driver. Uninsured motorist coverage is a type of coverage that highly protects you in situations like this. If you decide to remove this coverage from your policy to cut your insurance costs, you would have no coverage if you were involved in an accident like this.
You might end up being sued
The other thing to realize is that if you cause an accident to occur and do not have enough insurance coverage to pay the victim's bills, that person could sue you. If you own a house, cars, and other assets, you could stand to lose these items if you end up in this situation, primarily because if you cause an accident, you will be responsible to pay the other person's damages. This includes damages to the person's car, medical bills, lost wages, and many other types of damages.
If you want to make sure you are fully protected with your auto insurance coverage, talk to an agent about your needs and your policy.