Insuring Family Cars Too High? Five Factors To Consider

June 8, 2011

No question the economy has caused some serious disruptions in family financial situations. Many families have made lifestyle changes they’d never have imagined doing just to survive. In a struggle to make ends meet, many are making decisions that could prove either costly or cost-efficient, one of which involves car insurance.

But what you do can make a huge difference in how much you save or have to pay to insure your family cars.

A recent survey by the National Association of Insurance Commissioners (NAIC) found that more than half (53 percent) of Americans made an economic-driven lifestyle change during the past year that could affect their car insurance.

Most-common car-related lifestyle changes

According to the survey, three lifestyle changes surface as the most common ones made by Americans in the past 12 months.

  • Driving less or taking public transportation – 40 percent of respondents cited this
  • Trading in or getting rid of a second car – mentioned by nearly 20 percent
  • Cancelling or reducing car insurance coverage – almost 20 percent took this action

Five factors to consider before making a change

Sometimes you don’t have a choice in the matter – such as getting losing your job or experiencing high medical bills due to a family member’s illness – but keep in mind that if you’re looking to cut costs and center in on car insurance as one key area to hit, keep the following five factors in mind before making big changes.  

Moving – Your zip code makes a difference in how much you’ll pay for family car insurance. While you may need to move – you’ve lost your house or sold it because you couldn’t afford it – if you’re moving to an area where there’s more crime, you’ll wind up paying more for your auto insurance. The reverse is also true. If you move to a “safe” neighborhood, you’ll likely pay less. Also be sure to garage your car instead of parking on the street, as this lowers your premium. And relocating to another state may put you into a state with no-fault coverage or different liability requirements.

Changing cars – Downsizing or getting rid of a second car in the family may save you money. So will buying a more fuel-efficient car like a Chevrolet Cruze or Ford Fiesta or a Toyota Prius, Hyundai Sonata or other hybrid. The make and model of the car you buy makes a difference in your premium. Cars with lower resale value are cheaper to insure, usually, and if you pay off your car, you’ll likely be able to drop collision or choose a higher deductible. When adding a car to the family, be sure to ask about a multi-car discount.

Changing jobs – Unemployment is still high at around nine percent and many Americans, even if they still have a job, are struggling to pay the bills. With less money coming in, families are faced with some tough decision-making. Changing jobs may mean a longer or shorter commute, relocating, taking less money, losing benefits and more. Cancelling auto insurance or not sending in premium payments could make a bad situation worse. If you don’t have auto insurance and are in a serious accident, the financial consequences could result in you losing your house or other assets to pay for other victims’ injuries. Reinstatement costs for lapsed policies, plus loss of continuous coverage discount and the possibility the insurer will consider you a higher risk will also result in higher premiums when you get coverage back.

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