Most importantly, any collision has the chance to bankrupt you. Specifically, if you cause another driver bodily harm, you are responsible for his or her medical bills. Depending on your bodily injury insurance coverage, you could be responsible for a large chunk of that bill. In California and Arizona, for example, the legal minimum insurance policy for bodily injury is $15,000/$30,000. This means that the insurance agency will cover $15,000 of the other driver’s medical bills in the event of a collision, with a maximum of two collisions per year.

Obviously, if the other driver suffered significant injuries, his medical bill could be quite a bit larger than $15,000. Something as simple as a rear-end collision can cause significant back and neck injuries, forcing you to foot the bill for thousands of dollars of physiotherapy treatments. Before you know it, one simple accident ends up costing you far more money than you would have paid for additional coverage.

Another major reason to avoid bare-bones insurance coverage is to reduce the threat of lawsuits. In America, lawsuits are becoming increasingly more common. When you’re protected by a ‘bare-bones’ auto insurance policy, you also receive the most minimal legal protection. For example, if an injured driver sues you for $800,000 in damages when your insurance plan covers only $200,000, you are personally accountable for making up that difference.

Driving schools often scare young drivers with the legal implications of bare-bones auto insurance. For example, let’s say you hit another vehicle on the driver’s side door. During the collision, the other driver got two of his fingers stuck in the wreckage, and they had to be amputated. If that driver has a job in which he uses his fingers every day, he can file a lawsuit for lost wages and other damages. For example, if the driver was a middle-aged dentist with years of specialized education, you can quickly end up owing hundreds of thousands of dollars to that individual.

Bare-bones insurance plans can also be subject to rising rates. While the initial cost of the plan may be significantly lower than its competitors, this could gradually increase over time. Before you know it, your bare-bones auto insurance is costing you more than a better policy from a difference insurance agency.  

Adding fifty dollars onto your monthly auto insurance bill may seem like a lot. However, in the long run, it’s often worth it to choose a more extensive plan. With bare-bones auto insurance coverage, you’re accepting a large amount of risk. When that risk catches up to you, you can be on the hook for an incredible amount of money. Before signing up for an insurance plan, always ask yourself: is bare-bones auto insurance really worth it?

One of the easiest ways to get cheaper auto insurance is to use one agency for all your insurance needs. Most providers will reward their customers if you do a lot of business with them. For example, if you have home, life, and auto insurance, the agency will offer you a discount.

Another easy way to reduce your auto insurance is to increase your deductible. Many providers give you the choice of a $250, $500, or $1000 deductible. If you choose the most expensive option, then your monthly rates will drop. Unless you are frequently getting into at-fault collisions, then increasing your deductible is a guaranteed way to save money.

Since insurance is a business, many providers will not inform you of any additional discounts. However, that doesn’t mean that they aren’t available. Discounts can be based on things like a good driving record, or the type of vehicle driven. In many cases, you can reduce your monthly rate simply by asking if you are eligible for any further discounts.  

If you are able to pay off your auto insurance in one annual, lump sum, then do so. Insurance agencies make millions of dollars from people who choose the month-to-month plan. By opting for the annual, lump sum payment, you can avoid the extra fees and premiums. This will significantly reduce the total amount of money you pay for your auto insurance.

It is important to understand the insurance requirements of your state or province. For example, cars registered in California must have an insurance plan that covers both bodily injury and property damage. In order to legally drive on California roads, you must maintain that minimum level of coverage at all times. Fortunately, most state insurance agencies will bundle up all of the required liabilities into one convenient package. However, it’s important to be aware of these restrictions when dealing with any national insurance companies. 

The area in which you live can also affect your auto insurance rates. If you live in a neighborhood that is low on crime, your rates will be slightly lower than those who live in a high-crime neighborhood. On a similar note, having a reliable security system installed in your car will also decrease your rates, as your car is less likely to be stolen.

Unfortunately for singles, married people pay less for car insurance. This is simply because married men and women are placed in a lower risk class. That being said, both married and single people can bundle multiple vehicles together in order to receive a significant discount on insuring their second automobile.

Above all, the most important way to get cheap auto insurance is to shop around. Only after extensively researching your options can you accurately make the best choice. Furthermore, some insurance agencies will match their competitors’ prices, meaning that you can play them off one another to get a lower rate. Insurance is clearly a field where prior research and hard work is rewarded.