Steven Cole Smith AUTOMOTIVE April 29, 2011
With the Florida economy down and gasoline prices up, L.J. Ford, a part-time resident of Pompano Beach, is looking for ways to trim his transportation costs.
"We have several vehicles, including our large RV," he says, "and insurance costs are becoming an issue. I would like to know at what point it's worthwhile to drop full-coverage insurance on a vehicle to save money?"
Pete Dorigizzi, sales manager for Heacock Insurance Group, headquartered in Lakeland, said that's "a very common question, and a good one -- unfortunately, there is no one-size-fits-all answer."
Some experts have attempted to use a formula to determine when you should trim the amount of auto insurance you carry: Consumer Reports, for instance, says that full coverage -- which includes collision and compressive insurance, which covers repair or replacement of your vehicle after an accident, fire, theft or a natural disaster -- "can be dropped when the premium equals or exceeds 10 percent of the car's book value."
That formula works for some, but may not work for others, Dorigizzi says. "It all comes down to how much out-of-pocket expense you can stand if your vehicle is wrecked or destroyed," he says. "And that can change yearly, as your personal finances change."
It's a moot point, though, if you still owe money on the vehicle's purchase or lease. And with 72-month financing not uncommon a few years ago, that remains the case for a lot of Florida motorists. If you financed the vehicle, likely you signed a statement saying you would maintain full coverage until the loan is paid off, to protect the lender's investment. With very long loans, you may still have to provide full coverage on a vehicle that, otherwise, didn't deserve it.
If you own the vehicle outright, Florida's minimum insurance requirement to get tags is just $10,000 in liability, and no collision, comprehensive or coverage that protects against uninsured motorists. And in times of financial crisis, Dorigizzi says he frequently sees drivers who "underinsure" themselves. In any kind of court case, $10,000 in coverage can evaporate almost immediately. Dorigizzi says drivers can be risking everything they own "to save what might turn out to be pennies a day."
One additional reason that might be a bad idea: He says many insurance companies encourage motorists to carry higher limits of liabilities by pricing that extra coverage attractively. "You probably aren't getting the best deal the company has to offer if you are buying the minimum amount of coverage."
Your driving record also has a bearing on whether we're talking about the potential to save $200, or $2,000 a year. The best drivers get the biggest discounts, and there are often multi-vehicle discounts that can help lower your total expense.
Florida, he says, is on par with the rest of the nation when it comes to insurance costs, and the need for coverage. "We may have the potential for hurricanes, wind damage and tornadoes here," he says.
Tammy Field, a
Tampa agent with
AAA Insurance, says that on older cars, it might make sense to keep comprehensive and drop collision coverage. "Comprehensive covers vandalism, theft – a big problem in Florida – and broken glass, and there's no deductible on glass," she says.
Indeed, Heathrow-based AAA, in its annual survey of the cost of owning and operating a vehicle, says that insurance costs actually dropped nationally in 2010. The average insurance costs for a sedan, for example, fell 6.1 percent, or $63, to $968 annually. Large sedans and minivans had the largest cost savings.
Indeed, even on older vehicles, Doriguzzi says that the cost of collision and comprehensive insurance will vary according to the vehicle -- that coverage for one car worth $6,000 will be different for another car worth $6,000. A common car like the Chevrolet Impala cost less to cover than a Chevrolet Corvette worth the exact same amount on the used car market because insurers factor in the car's performance -- a "power to weight" ratio -- and how much it costs to buy parts and repair a damaged car.
Bottom line: There are degrees of altering your auto insurance coverage to save money without entirely dropping coverage. If you have, say, a $250 deductible for collision and comprehensive damage -- meaning that if your car suffers $2,000 in damage, you only have to pay $250 out of pocket -- you could raise that deductible to $1,000 and the savings could be considerable – or it might not be. "We've seen customers who would save only $15 or $20 by raising deductibles from $500 to $1,000," Field says. "It varies a lot with the individual."
"Work with your insurance agent," Doriguzzi suggests. "Like I said, seldom is there one answer for insurance concerns to everyone's question."
SCSmith3@Tribune.com 
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