How important is property damage coverage?
I recently received my renewal notice, which shows that my current property damage limit is $200,000, and the renewal cost for a 6-month policy for two people is $1,550.
I also received a quote from another provider, albeit a larger one, but they only offer a property damage limit of $100,000. Their quote is $950. I’m considering making the switch. What do you think? I still maintain bodily injury coverage of $250,000 per person and $500,000 per occurrence.
When considering whether to switch your insurance provider, there are several factors to weigh in addition to the premium cost:
Property Damage Coverage Limits: You currently have $200k in property damage (PD) coverage, which provides better protection for damage you may cause to others’ property in an accident. The new carrier offers only $100k in PD coverage, which may not be sufficient depending on your circumstances. If you’re involved in a serious accident, you could be liable for damages beyond that limit, leaving you responsible for anything over $100k.
Bodily Injury (BI) Coverage: Your BI coverage of $250k per person and $500k per occurrence is strong, and it’s important to maintain this level of coverage, especially in the event of severe accidents.
Cost vs. Coverage: The $600 savings with the larger carrier is tempting, but it comes at the cost of reduced PD coverage. Consider if the potential savings are worth the risk of insufficient property damage coverage.
Your Driving Habits and Location: If you drive in urban areas or areas with higher traffic where accidents are more likely, having higher PD coverage could be crucial. Assess whether the potential for higher repair costs aligns with your current coverage.
Financial Impact of a Claim: Contemplate the financial burden you might face if an accident leads to claims exceeding your PD limit. In some cases, the cost of switching for less coverage could outweigh the savings on your premium.
Ultimately, it might be a good idea to stick with your current provider for the higher PD coverage unless you are certain that you can manage the risk of the lower limit. Consider discussing your situation with an insurance agent or financial advisor to help you make a more informed decision.