Four ways to save money on car insurance | PEMCO

March 8, 2024 by PEMCO Insurance

GettyImages-1440703929.jpgIt’s no secret that many people have been feeling the pressure caused by rising prices these days. Whether it’s milk, eggs, interest rates, or pretty much anything else, stuff simply costs more more than ever! Consequently, we’re all looking for ways to save money. 

If you’re looking for ways to reduce monthly expenses, you may think your car insurance could be one of the first places to cut. But before you eliminate coverage (or let go of important coverages designed to protect you), know there are some not-so-obvious risks to consider. 

How reducing coverage may cost you in the long run 

In nearly all states, it's illegal to drive without minimum coverages or other proof that you can take financial responsibility if you cause an accident. If you're without proof of insurance during a traffic stop, you could end up with a fine (of at least $550 in Washington state). Worse, if you're at fault for an uninsured accident, you could face license suspension and higher insurance rates for years – not to mention financial hardship when you're forced to pay damages out of pocket. 

The stakes are even higher in Oregon, which is a "no pay, no play" state. That means if you get hurt in an accident caused by someone else, you could be limited from collecting non-economic damages (like pain and emotional distress) if you don't carry the state's mandated minimum insurance coverage. 

And, this is an important thing to keep in mind: Any lapse in mandated coverage - in any state - makes it harder and more expensive to buy insurance again when you're ready. You could be denied coverage for going a period of time without insurance. 

Even dropping optional coverages can have some unintended consequences: 

  • Comprehensive and Collision. Lenders require borrowers to carry these coverages on vehicles to protect their interest in case the car is damaged in an accident, stolen or destroyed in a fire. Dropping them could violate the terms of your car loan agreement and, by law, PEMCO must notify your lender if coverage stops for any reason. When that happens, lenders place "Vendors Single Interest" (VSI) coverage on your car, which protects only them if something happens to the vehicle. Lenders add the VSI premium to your car loan. 

  • Underinsured Motorist. Dropping these coverages could mean you'd expose yourself to potentially catastrophic financial loss if you were hit by someone who couldn't pay to fix your car or cover medical bills. 

  • Personal Injury Protection. Without this coverage, you'd need to rely on your health insurance if you were injured as a pedestrian by someone who couldn't pay. 

Safe ways to save on insurance 

Your lifestyle and insurance needs change over time, and we may be able to help you find safer ways to trim your bill that don’t come with (potentially catastrophic) caveats. Some possibilities: 

  1. Explore discount options. You may now qualify for discounts that weren't available earlier. For example, your young driver may be eligible for our Good Student Discount. 
  2. Consider increasing your deductible. That's the amount of money you'd pay out of pocket before your insurance coverage kicked in after an accident. Going from a $500 to a $1,000 deductible can reduce premiums significantly. 
  3. Revisit Comprehensive and Collision coverages. If the market value of your car isn't much higher than your deductible, you may want to drop those coverages* to reduce your premium. Learn more here about two ways the passage of time affects your car insurance. 
  4. Bundle coverage. If you currently have your renter or homeowner insurance with another company, consider bundling it with your PEMCO auto policy. You'll save on both. 

*If you drop Comprehensive and Collision coverage, make sure to buy the optional coverage at the rental-car counter when you rent a car, unless you have Comprehensive and Collision coverage on another PEMCO-insured vehicle or your credit card offers rental-car coverage as a perk. Otherwise, you could be personally responsible for repair costs and agency fees if you got in an accident while driving a rental. Coverage for rentals varies slightly between policies issued in Washington and Oregon. For details, please log in to your account to view your policy, talk with your local PEMCO agent or call 1-800-GO-PEMCO. 

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