Several Hawaii residents are looking into cutting back on their car insurance, but this is not advisable.
Island Insurance Companies, which is one of the largest insurers in the state, has noted that several clients think they are making a good decision to trim their insurance coverage when in fact it may not be a sound recourse.
Island Insurance Companies chief operating officer and president John Schapperle said that they have seen a lot of people who merely contend for what is minimally required by the state.
Schapperle also said that availing lower coverage would mean that there would not be enough coverage to take care of all accident claims. However, since insurance companies are not able to impose themselves, residents will most likely comply with minimum state limits. He added that their company has not noticed any trend of more and more clients opting for cheaper insurance despite the ailing national economy.
It may also be worth noting, according the Schapperle, that policyholders are always intent on gaining ‘short-term savings’ given the fact that auto insurance is not actually used on a daily basis. As a businessman, he sees value in people pursuing substantial auto insurance coverage. He also cited the tragic example of a certain Mr. Joseph Hallabay, a Kailua businessman and owner of a hair salon.
Hallabay, based on his first-hand experience, learned the hard way that it was a costly mistake when he chose to be too stingy with his auto insurance.
In the Chinatown area, Mr. Hallabay’s car was hit by a truck during the morning of May 8 last year. He was relieved that no one in his vehicle – himself and two passengers – was injured in the mishap. He then proceeded to file a police report and processed the necessary paper work to take care of his car repairs with the aid of the state’s ‘no-fault insurance law.’ After almost 8 months of waiting and being frustrated by delays, he pursued a case in the Small Claims Course.
Although Hallabay intended to save money on his yearly auto insurance expenditures, it came at the expense of not availing ‘collision coverage’ and spending less on insurance overall within minimum state limits. His estimated savings were around $300 to $400 annually for the past 5 years. Despite this seemingly noble initiative, he ended up spending much more than his savings to cover for collision damages. Had he not been stingy, his insurance company would have been able to cover for the costs of the other party as well.
Schapperle urges everyone to give much thought to their choices before cutting down on insurance without foreseeing that benefits they may forego.