Car insurance costs have increased substantially in the last five years, according to a CNNMoney editorial.
Premiums for the average driver have risen about 23 percent over five years versus 7 percent for overall inflation; for example, a 40-year-old man now typically pays $1,510 and up to $2,700, according to Insure.com.
Drivers can always switch to another insurer with less expensive premiums, but experts say they should be careful not to increase risk while cutting cost.
"You might save a few hundred bucks, but what will you cost yourself in protection?" Mark Romano of the Consumer Federation of America said.
Experts say drivers should be careful to protect themselves in key areas such as liability and repairs, according to CNNMoney.
When drivers are in accidents, the liability portion of their policies covers damages they cause to other cars, as well as the other party's medical bills and lost wages, plus pain and suffering. States require $10,000 to $50,000 in coverage, but drivers probably need more with increasing medical costs and lawsuits. If another injured party's bills top an insurance limit, they can go after your assets, Romano said.
Rates are based on a driver's risk. Analyst Laura Adams of InsuranceQuotes.com suggested drivers buy a value equal to their nonretirement savings, the money that would be at risk in a lawsuit.
At the least, Romano advised, get $100,000 per person or $300,000 per incident.
"I've seen too many auto injury cases," he said. "$100,000 for a settlement is nothing."
One in seven drivers is uninsured, according to the Insurance Research Council. Additionally, 20 percent of insured drivers buy only the minimum liability required, data firm ISO reported. Uninsured and underinsured motorist coverage helps pay the bill incurred by these drivers when they are involved in accidents.
But because only 15 states mandate this coverage and uninsured and underinsured insurance is so confusing, said advocacy group United Policyholders, many people underestimate their needs.
Uninsured motorist coverage varies from state to state, so drivers should check their insurance policies to see how they would be covered.
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