Auto Insurance And Your Budget: Updating Your Policy For The Bigger Picture

A true, working budget does more than just show you the numbers every month. It should allow you to analyze your spending in order to make smarter financial decisions that could affect you in the long run, like managing your car insurance policy from a company like Martin Insurance Company. Like all insurance, you pay for it hoping you will never actually need it. Since you are paying for that peace of mind, that coverage should be enough to actually alleviate any financial burden an accident can cause.

Reassessing Your Coverage Amount

On an accident-free, month-to-month basis, of course the minimal essential coverage's premium cost is going to seem appealing. However, unless you have the money to cover expenses beyond that amount, the cheapest premium may not be worth the coverage. Consider the cost of someone's medical bills, replacing a brand new car that is now totaled, and legal fees. How much could you pay for on your own? This is where the trade-off comes into play.

If an accident would leave you in financial ruin at the coverage level you are currently at, then it is not a functioning part of your budget because you are paying for something that will not actually help you. The insurance company's recommended amount of coverage is a good place to start when looking to update this amount.

Review Your Uninsured Motorist Coverage

Uninsured motorist coverage pays for you, your passengers, and damage to your car in the event that you get into an accident with an uninsured driver. Only 22 states legally require you to carry uninsured motorist coverage, but the risk of uninsured drivers or being involved in a hit-and-run is everywhere. An estimated one out of every seven drivers is uninsured. You are gambling high stakes if you do not currently carry any type of this coverage, as your insurance may not provide you with any assistance and you will be left paying for everything out of pocket.

Adjust Your Deductibles And "Extras"

Once you have adjusted the important numbers, you can adjust your deductible and less important perks in order to alleviate some of the cost of the premium. If you currently hold a $250 deductible for the convenience, but could feasibly put aside $1000 in savings to use in the event that you get into an accident, then raising your deductible cost could be beneficial for making some room in your budget. Similarly, if you own multiple cars or if temporarily using public transportation would not be a huge inconvenience, you can adjust or eliminate extras like rental car coverage to bring down the cost.

It makes little sense to pay for coverage that will still leave you cleaned out in the event of an accident. It is important to review both your budget and your policy terms regularly, making sure that they are both working together to give you the most financial stability.