Can You Get Cheaper Insurance if You Own the Car?

Car insurance is one of the big expenses that come with owning a car. But there are plenty of ways to save money on car insurance while still being insured. Insurance premiums can be lowered in a variety of ways. Many of them are easy to do, such as simply shopping around. Another way folks can save money on their car insurance is by owning a car, but it’s more complicated than just getting cheaper insurance. 

Why car insurance is so important

A red damaged car potentially with cheap insurance.
A red damaged car | Getty Images

Car accidents can happen at any time to anyone, and while safety features can keep folks safe, insurance is there for what happens afterward. This is why car insurance is not only essential to have, but also legally required in 48 states. Only New Hampshire and Virginia do not require drivers get insured. 

Not only does car insurance help folks get back on their feet after an accident, it can also help cover costs if you were the cause. Having car insurance takes away a lot of the hassle around accidents, injuries, and the whole legal process behind things. Drivers can let their car insurance company work things out with the other driver’s car insurance company, thus reducing headaches for regular people.

That said, car insurance is a complicated thing. Companies offer a variety of plans and options. Sometimes those options are mandatory. There is a legal factor people also need to remember, as different states have different laws regarding what car insurance requires.

You may be able to have cheaper insurance by owning a car

According to Erie Insurance, once you pay off your car, you can start taking more control over what insurance policy you want for your car. This is because when most people buy a car, they’re not actually buying it outright. What’s usually happening is they’ve taken a loan out, and the company that’s given them a loan will probably have some insurance requirements for the car. 

Once you pay your car off and own it outright, those insurance requirements no longer exist. Drivers can have the bare minimum insurance policy legally need and can save a lot of money. However, there is an important part to consider. Sometimes, the legally required insurance policies are not that different from what the company providing the loan requires. 

This means that some folks may not be able to save money on their car insurance even though they own the car. Many may not want to because they still want to keep those extra insurance policies

Keep these things in mind if you do choose to drop certain coverages in favor of cheaper insurance

If folks own their car and are thinking about dropping those extra policies, there are a couple of things to think about first. One of the most essential things is cash on hand. Collision coverage is an additional insurance policy that folks may consider dropping, and according to Erie Insurance, the average collision coverage claim amounts to about $3,500.

If folks drop collision coverage, they should expect to pay something in that ballpark out of their pocket if a collision occurs. As a result, keeping collision coverage may be the better call if you don’t have that type of cash sitting around. That said, it’s also important to consider how old the car is. If you own the car, but it’s so old that it’s not that valuable, then spending money on extra coverage may not be worth it.

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