Insurance agents and industry experts say that the sluggish economy is forcing many Americans to amend their policies to save money. Worse, some policyholders are dropping their policies altogether to cut expenses.
According to one insurance representative, Keith F. Doakes, the economic slump is making many policyholders reconsider how they spend money on their insurance. Doakes, who has been in the industry for 24 years now, says the current situation is the worst he’d seen, especially because the tough economic conditions is making it harder to find new customers.
He points out that people often trim down their costs by reducing their car insurance coverage significantly. In fact, he points out, many car owners reduce their coverage from comprehensive and collision to simple liability insurance.
Experts say that if these motorists figure in an accident, they have to pay for expensive repairs themselves. While they may be protected against lawsuits, policyholders will have to shoulder other expenses from their own pockets.
Other insurance agents are also seeing the same scenario. They say that some drivers often downgrade their coverage or cancel them altogether unless the insurance companies force them to keep their comprehensive coverage.
Industry sources say that at most, car owners can save $50 each month by choosing barebones insurance coverage. While this may not seem much, it is enough to place food on the table, they add. Many Americans are faced with two tough choices, they explain: downgrade their coverage, or face less food to eat.
Several insurance providers have also reported that up to 80 percent of their clients are reducing their insurance coverage to the legally required minimum. In fact, they say, some car owners drive around with dents from minor accidents instead of reporting. They add that most drivers are afraid that reporting fender benders can mean higher premiums in the future.
The Insurance Research Council, an industry-funded research group, has recently released its findings regarding the current trend. According to researchers, most Americans are taking steps to cut back on insurance costs without giving up essential coverage.
Some 28 percent of car owners interviewed have admitted shopping for lower premiums when they normally would have stayed with their previous insurers.
The research also revealed that 15 percent have increased their deductibles or downgraded their insurance coverage to slash premiums. About a third of respondents who have dropped their policies claim that they have sold their cars.