What Matters (and What Doesn’t) With Auto Insurance

Since the economy-wide inflation of 2021, auto insurance has become the proverbial four-letter word for household and small business budget conversations. Everyone has called our agency over these past four years looking for ways to reduce their auto insurance premiums. And while the economy is improving and inflation has stabilized, much of the price increase is now “baked into the cake” and prices do not go down from here.

So, in an attempt to help our customers to NOT hurt themselves, below are some recommendations on what to focus on, and what is not important with auto insurance:

First, do not reduce your liability limits, ever. In fact, even when calling your agent to save insurance premiums, always ask about how much liability protection you currently have. And if you can, increase your liability. And yes, add umbrella protection.

Next, let’s talk about collision coverage. Consider increasing deductibles and removing collision on vehicles with a used car value of less than $5,000. I prefer a $1500 or $2,000 deductible. It lowers premiums and reduces the moral hazard of frivolous claim reporting.

Comprehensive coverage is for those incidents involving physical damage not related to striking another vehicle. Think of the impact of a deer, road debris, or a tree branch falling during a storm. We don’t advocate for removing comprehensive coverage, but a higher deductible can help.

We don’t advocate for choosing PIP (Personal Injury Protection) as a secondary responder to bodily injury claims. Some carriers have made significant marketing efforts to promote this option. We do not agree. Choose PIP primary and save money elsewhere. Similarly, while a PIP deductible higher than $250 can save money, it has consequences in a densely populated state like New Jersey with so many drivers on the road.

Uninsured motorist coverage is critically important. There are many uninsured and underinsured drivers on the road. Make sure you think carefully about lowering this section of coverage.

There are options for pay-by-mile, GPS, and internet-based driver monitoring. These are newer technologies and can save premium if you don’t mind the intrusion into privacy.

Make sure vehicles are rated with the correct driver, and the correct annual mileage. Make sure you take care of multi-driver and multi-vehicle discounts. Also, using the same independent agent for both home and auto can add additional credits. Make sure you explore veteran discounts, AAA memberships, and other ways to save.

But most importantly, remember that your auto insurance is more than a repair program for fender benders. A driver is ultimately responsible for the bodily injury they cause while operating a vehicle. These costs quickly escalate into six and seven figures. Your auto insurance is the only object standing in the way of total financial ruin. I don’t like paying for my auto premiums either. Keep your perspective and drive carefully.