Information Courtesy of USAA | Date published: May 21, 2021. | 2 to 3 Minutes
Saving a little by reducing your coverage amounts may be tempting, but it’s important to consider the potential pitfalls.
If you plan on reviewing your auto policy during this pandemic, please consider:
- If your vehicle is leased or you have a lienholder, consider their requirements before removing or reducing your coverage.
- It’s important to maintain proper coverage in the event you need to leave your home for an essential need. Unless necessary, remove or reduce coverage only if you no longer have a need for that coverage.
- Remember to re-add any coverage that was removed or reduced during this time before driving your vehicle.
- While reviewing your policy, determine if the coverage limits you choose are sufficient to protect your assets or net worth.
- If you only have one vehicle in your household, we encourage you to maintain your current coverage should you need to drive your vehicle.
- Bodily injury and property damage liability may be reduced to state minimum amounts.
- Collision and comprehensive coverage will apply only if your vehicle is financed, and only to protect the lienholder’s interest.
- Rental reimbursement and towing and labor will not be covered.
- The endorsement needs to be removed before driving the vehicle.
Your home is likely your biggest asset and protecting it should be a primary concern. Here are some things to consider before reducing coverage on your property policy:
Review Your Dwelling Coverage (Coverage A)
- When your budget is stretched thin, look for other options to help save money that don’t put you at financial risk.
- Insurance is meant to pay for covered damage to your home and helps you recover financially if you experience a covered loss.
- By maintaining enough coverage to rebuild your home, you’ll limit your out-of-pocket expenses in the event of a total loss and maintain your peace of mind.
- Request quotes for different deductibles to find the best option that meets your financial circumstances and the level of risk you’re willing to accept.
- If you choose a higher deductible, make sure you have enough cash in an emergency fund to cover the full deductible amount.
- If you have a mortgage, your lender may require that your deductible not exceed a certain amount. Consult your mortgage company before changing your deductible.
- Review discounts that you may qualify for, including having your auto and homeowners insurance having a central alarm system for protection against fire or theft.