Recession Forces Drivers to Reduce Car Insurance Coverage
Drivers are being forced to reduce coverage due to the recession. More drivers are opting out of collision and comprehensive car insurance, according to a recent study from analytics firm Quality Planning. Those who wouldn’t/couldn’t forgo physical damage coverage are opting for higher auto insurance deductibles in an effort to keep premiums down.
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Written by
Shuman Roy
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Reviewed by
Joel Ohman
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UPDATED: Jan 16, 2021
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More drivers are opting out of collision and comprehensive car insurance, according to a recent study from analytics firm Quality Planning.
The company noted from 2006 to 2010, those ditching such car insurance coverage options increased sequentially, especially for older vehicles (10+ years old).
During that period, the average percentage of older vehicles without collision or comp increased from 53 percent to 63 percent as drivers sought to save money on car insurance premiums.
Doing so actually saved drivers $229 annually on average.
[When to opt for liability only car insurance.]
At the same time, most drivers of newer vehicles opted for full coverage auto insurance as physical damage coverage is often mandatory for those who lease or borrow money to purchase their car.
After all, the lien holder, or loss payee, will certainly want to insure their financial interest in the vehicle.
Higher Deductibles Also En Vogue
Those who wouldn’t/couldn’t forgo physical damage coverage are opting for higher auto insurance deductibles in an effort to keep premiums down.
Higher deductibles mean the insured pays for more out of their own pocket in the event their vehicle is damaged.
[What happens to an insurance premium when a deductible is lowered?]
Saving money on insurance is always a good idea – just be sure to carefully consider your budget prior to making any rash decisions to drop coverage.
Insurance might not seem important, but it can be a financial life-saver in the event you really need it, especially if your negligence causes considerable property damage or someone severe bodily injury.
Tip: Before dropping coverage, shop your insurance rate with a local independent insurance agent to ensure you’re getting the best deal out there.