During difficult financial times, it’s expected that consumers will cut back on expenses and carefully examine their budget in an effort to save money. While businesses and individual households are each confronted by the fallout from an economic crisis, the impact is often felt the hardest at the family level. Whether it’s foregoing entertainment, getting rid of cable, or cancelling subscriptions, periods of economic uncertainty cause households to seek ways to tighten their belt and restrict spending.
Another family budget item that is scrutinized during tough times is Personal Auto Insurance. It’s no surprise that in many households, a robust, Personal Auto insurance program is often viewed as a luxury, rather than a necessity. TV commercials dangerously suggest that the process of purchasing Personal Auto insurance is quick and easy. The intentional commoditization of the Personal Auto insurance product by many carriers creates the dangerous assumption that it is financially prudent for consumers to offset economic strain by decreasing their coverage. In reality, doing so may lead to adverse financial exposure.
In order to fully examine the cost effectiveness of coverage selection, it’s first important for a consumer to develop an understanding of how Personal Auto insurance rates are calculated. To begin, like many other types of insurance, Personal Auto insurance is not priced on a one-size fits all basis. Like a fingerprint, premium is unique to an individual. The same is true for families.
Overall, Personal Auto insurance premium is determined through a number of factors including, but not limited to, Motor Vehicle Record (driving history), credit, vehicle usage, where you live, age, gender, marital status, homeownership, and type of vehicle you drive. Coverage selection plays an important role in premium calculation. Deciding what coverage to purchase is akin to deciding how well do you want to protect your family.
When it comes to selecting Personal Auto insurance coverage, consumers can often feel confused and overwhelmed. Some might wonder, “what’s a tort option?” Or, “what’s the difference between Uninsured and Underinsured Motorist coverage?” If these questions aren’t given the proper consideration, a consumer may expose their personal assets. Reducing Personal Auto coverage for sake of short-term relief may cause long-term, adverse financial implications. Rather than reducing liability limits, dropping physical damage coverage, or restricting your ability to recover damages from a responsible Third Party, there are other strategies that you can implement to achieve the desired savings.
At Seltzer Group Partners, our Personal Lines team specializes in finding solutions to protect what matters most to individuals and families. Despite these challenging times, we’re ready and able to assist. Give us a call today!