Is it possible to have excess car insurance?

It is possible to have excess car insurance when you aren’t sure of your state’s insurance laws or don’t fully understand the terms of your policy. Many drivers are paying for more coverage than they need, and you can reduce your auto insurance rates by driving with the right amount of coverage. Read our guide to find out if you have excess auto insurance and how to reduce your rates.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Oct 31, 2020

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Many people today are wondering if they are paying too much for their car insurance premium. Check online for cheap car insurance quotes to see if you are. Some may have learned that their own friends, family members, or women are paying less on their car insurance premium than they are.

Others may have seen TV commercials that promise to help them save money on their car insurance expense. You can easily compare auto insurance rates by entering your ZIP code into the FREE tool above. While this is a great way to compare car insurance rates, it may have crossed your mind that you are paying for more coverage than you really need.

How Car Insurance Works

In order to determine if you are paying for excess car insurance, you first should understand how car insurance works. Many drivers today pay their premium regularly, but they do not fully understand how a policy can benefit them. Any time you file a claim, you will be responsible for paying your deductible out-of-pocket.

Then, your insurance benefits will be applied up to the limits of your coverage. Further, insurance benefits will only be applied for specific types of claims. For example, liability coverage will not pay for repairs to your own vehicle, but collision or comprehensive coverage will.

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Can You Have Too Much Insurance?

The fact is that some drivers are paying for more coverage than they need. One common way this happens involves collision and comprehensive coverage. These types of coverage will pay for your own vehicle repairs, but the reimbursement to you has an upper limit determined by the value of your car.

The cost of the insurance may exceed its benefit. Vehicles depreciate in value quickly, and some drivers may not realize that this coverage is simply not beneficial to them any longer due to their car’s value.

For example, if your car’s value is determined to be $6,500, your car insurance policy will not pay for damages that exceed this amount. In cases where a vehicle has a very low value, the benefit offered by collision or comprehensive insurance is low.

What You Can Do

Vehicles depreciate in value regularly. The element of time coupled with wear and tear as well as increased mileage on the vehicle can all cause the value to depreciate. It is a wise idea for all drivers to review car insurance coverage today. You may need certain types of coverage, but other types of coverage may simply be unnecessary.

Coverage You May Need

While you may not need some types of coverage, all drivers should purchase at least some car insurance. So what types of coverage do you need? Consider these different types of coverage.

  • Liability: Many states require a minimum amount of liability insurance by state law.
  • Gap: Your car lender may require this coverage if you have a car loan in place
  • Collision or Comprehensive: This coverage may be required by a car lender, and is recommended for all vehicles with a moderate to high replacement value
  • Personal Injury: This coverage may be needed to pay for your own medical bills if you are not covered by a good health insurance plan.
  • Uninsured Motorist: This coverage can pay for your expenses if you are hit by an uninsured motorist.

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Coverage You May Not Need

The above coverages may be needed by some drivers, but they may provide a driver with excess or unneeded coverage. So how do you know when you are paying for too much coverage?

  • Liability: Drivers may be required to pay for damages they cause to another driver. When liability coverage does not fully cover these expenses, a driver may be sued for damages. However, drivers who have very few assets to lose by being sued may not benefit by purchasing more than the required liability coverage.
  • Gap: Unless required by a car lender, drivers should carefully monitor the difference between their car’s value and their loan amount. Over time, a car loan balance will be paid down, and a driver will owe less on the car than it is worth. When this point is reached, gap insurance is not necessary unless required by a lender.
  • Collision or Comprehensive: This coverage may not be necessary for vehicles with a low replacement value, unless required by a car lender.
  • Personal Injury: This coverage may not be beneficial to a driver who has access to a good healthcare plan

Making Insurance Affordable

One of the most important steps a driver can take to make car insurance affordable is to review his or her coverage amounts on a regular basis. High risk driving is the first thing that will increase your premium. Drivers may benefit by getting into the habit of reviewing coverage amounts at the time a policy renews. This is also a good time for a driver to compare rates to ensure he or she has the most affordable coverage available.

If you have a greater ability to pay a higher deductible amount out-of-pocket when you file a claim, you should consider increasing your deductible amount for savings on your premium.

Consider increasing your deductible amount. Many drivers initially opt for a $500 deductible because it is affordable or because their insurance agent recommended that amount. However, over time, a driver’s level of personal savings may increase.

Pay your insurance premium in full. By paying your premium in full, you can avoid paying a monthly convenience fee on your payments.

Use car insurance discounts. By taking time to research available discounts and use them effectively, you can drastically reduce your premium cost.

While some drivers are under-insured, many others are over-insured, paying for more coverage than is beneficial to them. Consider reviewing your coverage amounts today to determine if you may be paying for more car insurance then you need. You can also enter your ZIP code into a FREE rate comparison tool right now to look for additional savings on your car insurance.

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