News broke about a recent study that was released, aggregating data on the insurance industry. Most people don't know this, but the average American pays too much for auto insurance. The average in America is around $148 per month, or just over $1,700 per year. This is a bit too much to pay, especially in times of inflation when rent, fuel and food are all on the rise. The real issue here, according to resources like Banktree, is that people are buying more car insurance than they actually need. The reason here is easy enough to figure out. In America, in all 50 states, it is mandatory that a driver has auto insurance for their vehicle. Because auto insurance is compulsory, most Americans are given to the classic up-sell from insurance companies, where the insurer convinces you to get another type of coverage for just a few dollars more.
In some sorts of situations, you will need this extra insurance. For instance, if you own some type of vehicle fleet, or if you use your automobile for work purposes, then you need complete coverage that's truly going to protect you from accidents. Other than that, however, you don't need to be tricked by these funny "Mayhem" commercials. Accidentally rear-ending someone in a parking lot and having a little fender bender is common, and it is covered by liability. You don't need the full suite of All State or Progressive coverage for these instances. You're going to pay a small fortune annually for these policies, and they're not really much better than basic liability, as you will still have to go out of your pocket for deductibles and you'll still have to deal with spiking rates.
People end up getting comprehensive coverage, collision coverage, and tying different vehicles into the same sort of coverage, and so they end up paying way too much for auto insurance. Oddly enough, in areas where homeowners' insurance is compulsory, people just go with the bare minimum. Though when it comes to auto insurance, a lot of people are opting for add-ons that, generally speaking, they do not need. A big part of the reason here is that auto insurance companies are great at understanding how to play on people's fears. Everyone has seen huge accidents and mangled cars, and people who were injured or killed when driving. So it becomes very easy to convince some people that they need to buy more auto insurance. No matter what type they have, they can be scared into buying even more of it.
Another reason that people purchase extra auto insurance is that don't realize just how expensive it is. Sure, they see that monthly bill, and they know it's rather steep, but they don't understand that this is because they have the wrong type of insurance. They treat their insurance premiums like they treat fuel costs, and basically shrug their shoulders and say, "Well, this is what it costs, and I have to have it." This sort of inattention could be costing you over $50 per month. That doesn't seem like a whole lot, but it adds up. It's $600 per year. That's an entire vacation for many people.
Cut-Backs Are Not Eliminations
A lot of people will likely read this and think that they're being asked to eliminate their car insurance entirely. No; you need your insurance. It's illegal to operate your vehicle without having some type of insurance. The point here is that you may be paying too much. Of course, if you can afford it, then by all means, keep your insurance so that you have ample protection. Though there are millions upon millions of Americans out there who could really use that extra $50 per month for groceries, credit card bills, utility payments, etc. For these people, rolling back to basic liability is actually a pretty good way to save money. Getting rid of more comprehensive coverage doesn't mean that you're getting rid of everything.
There's also a real benefit to doing this too, which you may receive from your insurer. Nine times out of ten, when you tell your insurance company that you want to roll back your coverage, what they're going to do is offer you a steep discount just to keep extended coverage with them. What they fear here is that you'll first roll back, and then leave; so, what most end up doing is providing you with additional coverage (beyond liability) for free for a certain time, or greatly reduced. So, you may not have to cut back too much at all yet still get to save money.
