If you’re low on cash, you may be able to save some big bucks on your auto insurance by switching to basic liability on your auto insurance. This can be a good option for some people, as long as you understand what you’re getting into. Here are the basics on cheap auto insurance.
It is liability auto coverage only – This means you’re carrying just the minimum auto insurance required by law. If you’re in an accident, it insures the other driver in the event that you are at fault. It does not cover any damage to your vehicle or any medical expenses you might incur. It simply pays the other driver for damages you caused. For this reason, you can’t go to this type of coverage if you have an auto loan. The bank carrying your loan will require you to carry collision coverage for as long as they carry a note on the car.
It’s only good if your car is of low value – In the event of an accident, you’ll receive no compensation for your own vehicle if the accident is your fault. However, if your car is worth so little that it doesn’t make sense to insure it, switching to liability only may be a smart financial option.
If your car is stolen, vandalized or is damaged by elements such as wind or hail, you’ll have no insurance coverage. This type of damage is covered by comprehensive auto insurance.
If you’d like to save money on your car insurance, but you aren’t ready to drop to liability coverage only, there are certainly other methods. Take a look, for example, at your deductible. If you have a very low deductible, you can likely save money by switching to a higher deductible in order to obtain lower premiums. This will mean you’ll have larger out of pocket expenses in the event of an accident, but will save you money every month.