Discount Car Insurance Perks and Pitfalls

Discount car insurance, while seemingly a good idea, Unfortunately can also reduce the plan's efficiency and effectiveness. It is important to know both the perks and the pitfalls involved.

Saving Money on Monthly Premiums

Saving money on your monthly premiums is certainly a perk of discount car insurance.  After all, who couldn't use a little extra cash each month?  Monthly premiums can cost drivers hundreds of dollars each month; for this reason alone, it seems like discount car insurance makes a whole lot of sense.

Paying Higher Deductibles

While it may not seem like a perk at first glance, paying higher deductibles is actually an advantage of discount car insurance.  By paying higher deductibles you end up paying less each month.  For example, if you pay a $500 deductible instead of a $250 deductible, your monthly premium payment could drop from an estimated $145 to $125.

Utilizing Discounts

One of the great things about discount car insurance is in the name; you get to use a lot of discounts to get the insurance. Discounts are lurking all over car insurance policies and some of them are better known than others.  You can get a discount based on where you live, the type of car you drive, your personal driving record, and the safety and anti-theft features on your car.  Additionally, your profession, membership to various professional organizations such as AAA, or paying your bill electronically can save you money while still insuring you as fully as you need.

Being Underinsured 

One of the biggest pitfalls of discount car insurance is the risk of being underinsured.  While it might seem tempting to go the easiest route to the discounts and buy as minimally as possible, only insuring yourself to the extent that the state requires is risky and not recommended.  If you are underinsured you run a big risk to yourself not only physically but financially as well. One good way to avoid being uninsured is to assess how much damage your car is capable of causing; if it is more than its worth you should consider insuring it accordingly.

Other Things to Consider

The best way to make the most of discount car insurance is to take a well-rounded policy and apply as many discounts to it as possible.  This way you are still maintaining appropriate coverage while paying less.  Things can become dangerous when you take discount car insurance too far and become an underinsured driver.  You should try to avoid this situation at all costs; even though it might be hard to make those monthly premium payments, it will be a lot worse if you are left financially incapable of covering damage and thereby possibly destroying your credit rating.

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