OAI Advises Auto Insurance Shoppers on the Pros and Cons of Cutting Coverage

RANCHO CUCAMONGA, CA, March 19, 2012 (Press-News.org) A recent FAQ from the writers at OnlineAutoInsurance.com points out the fact that consumers can get some savings by reducing coverage or by going with the minimum liability limits required by state law, but previous premium analyses from the company show that California policyholders can actually get significant increases in coverage without having to pay proportional increases in premium. 

According to state law, all drivers in the state must carry California auto insurance coverage that provides for a total of at least $30,000 for bodily injuries caused by the policyholder and at least $5,000 for property damages caused by the policyholder in an accident.

And while sticking with the minimum coverages might seem cost-effective when the premium comes due, it might be financially ruinous after a serious accident.

In serious crashes, the cost of treating injuries to multiple parties could total more than $30,000, and the cost of property damages could easily exceed $5,000. 

And what happens if the crash costs that a person is liable for exceed their coverage limits? They're still on the hook for those damages, and they may have to pay out of pocket. That's where the financially ruinous part of this scenario comes in. 

Instead of leaving themselves vulnerable to these out-of-pocket costs, drivers with minimum limits might want to consider bumping up their protections. 

A 2011 analysis of sample premiums from seven California insurance companies conducted by OnlineAutoInsurance.com showed that nearly doubling liability limits from the state minimums would increase liability costs by an average of only 9.4 percent. 

Even more impressive, the analysis showed that increasing total bodily injury liability limits from $30,000 to $300,000 and taking property damage liability limits from $5,000 up to $50,000--an overall increase of 900 percent--only cost an additional 20.66 percent, on average. 

That's a lot more coverage for not that much more in added premiums.

The percent increase did vary among companies. To find out which providers would provide the most coverage for the best price, drivers should make sure to shop around and compare quotes from multiple companies. 

"It is important to get quotes from different companies," write California regulators in a consumer guide. "You may not realize it, but the insurance rates you pay for your car can vary dramatically depending on the insurance company you choose. You should always compare before deciding on a policy."

Source: http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0010-automobile/Auto-insurance-101.cfm

For more on this and other coverage issues, readers can head to http://www.onlineautoinsurance.com/california/ to get access to informative resource pages and an easy-to-use quote-comparison generator. 

For access to the full FAQ on getting cheaper premiums by reducing coverage, click the Questions link located at the top of any page on the site. 

Website: http://www.onlineautoinsurance.com