How to Manage Insurance for a Rarely Driven Car: A Case with State Farm
Managing insurance for multiple vehicles can sometimes feel like a balancing act, especially when one of those vehicles is only occasionally hitting the road. In our case, we own three vehicles, one of which is an older Toyota Camry that barely averages 15 miles a week on low-traffic streets around our home. Understandably, we’re looking for ways to cut down on insurance costs for this lightly-used car.
The Insurance Dilemma
The Camry contributes to our insurance bill, and it seems exorbitant to maintain high liability coverage for a vehicle that’s rarely in motion. Our aim is to exclude this particular car from our umbrella insurance policy. It feels impractical to incur significant costs for high liability coverage when the likelihood of our Camry being in a major accident is minimal.
However, our insurance agent from State Farm has informed us otherwise. According to them, reducing the liability coverage or removing the Camry from the umbrella policy is not an option. Interestingly, even if we switch the Camry’s insurance to a different company, maintaining a liability coverage of $500,000/$100,000 is mandatory to avoid cancellation of our State Farm umbrella policy.
Exploring Options
Given this situation, we’re in search of viable options that might allow us to reduce the costs associated with insuring our low-use Camry while still maintaining the umbrella policy for our other vehicles. It raises important questions about the flexibility of coverage terms and what alternatives might be available to vehicle owners in similar circumstances. Consulting with additional agents, exploring different insurance providers, or investigating potential policy amendments could be potential avenues worth exploring.
If you’ve navigated similar insurance challenges, or have insights on managing policies for seldom-driven cars while keeping umbrella coverage intact, we’d love to hear your thoughts.
It seems you’re facing a common dilemma when trying to balance insurance coverage for lightly used vehicles. While your agent’s information is typically aligned with industry standards, let me provide some clarity and potential strategies.
First, it’s important to understand the reasoning behind the requirement to maintain higher liability coverage. Umbrella policies are designed to provide additional liability protection, but they generally require a minimum level of underlying liability coverage on all insured autos. This is because umbrella policies usually kick in only after the underlying coverage limits are exhausted. Therefore, insurers mandate minimum coverage levels to limit their own exposure.
Given that, your agent’s advice is generally correct. If you want your umbrella policy to cover any of your vehicles, you must maintain the required underlying coverage on all autos that are part of your personal insurance portfolio. Here are a few options you might consider to potentially lower your costs:
Reassess Usage Classification: Start by checking how your Camry is classified in terms of usage with State Farm. If it’s listed as a primary vehicle, ask about switching it to a secondary or pleasure use status. Some insurers offer lower rates for vehicles that are driven less frequently. This classification change could potentially lower your premiums without affecting your umbrella coverage.
Consider Mileage-Based Insurance: Some insurance companies offer pay-per-mile or usage-based insurance plans that rely on telematics. Depending on the company, you might only pay premiums based on actual mileage driven, which could be beneficial for lightly used cars. Although this would involve switching insurers, it could align your costs more closely with the actual risk.
Shopping Around: While your current agent insists on maintaining high coverage levels, it’s always beneficial to shop around with other insurers. Each company might have different underwriting guidelines and requirements for umbrella policies. Another company may offer more flexibility in terms of coverage requirements, especially if you find an insurer that specializes in low-mileage policies.
Raise Deductibles: Increasing your deductible on the Camry’s regular auto insurance policy can reduce your premium. While this doesn’t affect liability directly, it can result in overall cost savings on your policy.
Evaluate Bundling Options: If not already bundled, consider bundling your auto, home, or other insurance policies with the same provider. Bundling often provides discounts across the board, which can help offset costs without needing to change coverage levels.
While these strategies may not allow you to exclude the Camry from your umbrella policy, they aim to achieve the cost savings you