Adjusting Your Auto Insurance Coverage to Assume More Risk


Adjusting auto insurance coverage to assume more risk is something more and more people are using as a way to reduce monthly expenses. There are several options which you may consider, all of which result in more risk, but all of which also reduce your upfront cost.

The adjustments which you can make can be summarized as either reducing your coverage or increasing your deductibles.

As it relates to reducing your coverage, the combination of choices available can be overwhelming. There is very little that you can do with your personal and property liability coverage, as it is regulated on a state by state basis and is not optional. The real opportunity to assume more risk with your auto insurance is with your strategy for Collision and Comprehensive Coverage. Collision covers damage to your car when your car hits, or is hit by, another vehicle or object. Comprehensive covers your car for things other than collision, which would include situations such as theft, fire, and floods. If your vehicle is an older model with high mileage and a correspondingly low market value, you can elect to drop your collision and comprehensive coverage, and assume the risk of repairing or replacing the vehicle in the unfortunate event of an accident. Although you are increasing your risk it is limited to the value of the vehicle, and the lower the value of the vehicle, the lower the risk that you are absorbing.

If the thought of completely eliminating Collision, Comprehensive, or any other optional coverage is too concerning for you, then the other choice is to retain the coverage and increase the deductibles on your insurance policy. While this option still enables you to maintain coverage that would protect you against a catastrophic loss, it shifts the risk to you for less significant repairs which fall at or below the increased deductible.

It is clear that taking the time to understand the options for adjusting your auto insurance coverage to assume more risk can provide significant cost savings if implemented properly.

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Adjusting Your Auto Insurance Coverage to Assume More Risk