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Why Cheap Car Insurance Is So Expensive

February 4th, 2022 | 4 min read

By Steven Ladd

Do you ever find yourself looking for ways to trim your monthly expenses? Perhaps the XM subscription could go, or maybe the cable is finally up for consideration (that home phone line went bye-bye years ago). Or maybe, that money-sucking-always-increasing-car-insurance-policy could use a scalpel.

Tempting? Sure.

But, before you throw it on your table and go all Dexter Morgan with it, you’d be wise to familiarize yourself with the basics behind all those big numbers.

Before we go down that rabbit hole, there’s a secret I’m going to let you in on. Your car insurance rate has much more to do with you personally than it does with the type of car you have or the coverage on it. It’s true. Your policy’s premium is derived primarily from your qualifications, household makeup and driving history. Consider it your admission fee to the insurance party. Once you’re in, all the other parts have less of an impact on the total price.

Knowing now that it’s your personal good/bad/indifferent qualifications that make up most of your rate, let’s dig into some of the costliest parts of the policy. These include Bodily Injury liability, Property Damage liability, Personal Injury Protection (aka No Fault or PIP), Comprehensive (aka Other than Collision) & Collision (only known as, collision). I won’t go into great detail about the meaning of these coverages. There are deep-dive explanations throughout this site on those. For now, let’s pick on this list and review from a rate perspective.

Bodily Injury Liability

This is a big one, if not the biggest. If this coverage is inadequate, it can change your life. BI (as it’s known) is what pays other people who you’ve injured in a car accident. It’s also what pays for your lawyer because of that accident. In New York, the minimum amount of BI insurance required to register a car is $25,000. That’s it. It’ll be gone in no time. Should your liability exceed this $25k, you’re on your own for the difference. If you are looking to save money and you want to start here, I advise you to reconsider. Giving up tens or even hundreds of thousands in coverage here could end up saving barely a latte per month.

Property Damage

If BI is the granddaddy of car insurance coverage, then PD (as it’s known) is its son. This is the coverage that responds to the other car(s) or property you damaged or ruined in the accident. Our state has a minimum on this one too and it’s $10,000. Have you shopped for a car lately? $10,000 isn’t getting anyone too far. Like its BI dad, once you exceed the $10k, you’re paying the rest of the tab. Also, like its dad, taking a sledgehammer to this won’t yield any savings to get excited about. In fact, I’ve seen policies change by no more than $2.00/yr. (yes TWO) when reduced from $100k to $50k.

Personal Injury Protection

Personal Injury Coverage, or “no-fault” as it is also known, is what pays for medical expenses regardless of fault. If I injure you or anyone else in the vehicle in a car accident, it’s your car insurance who will step in and pay for the doctor’s bills, ambulance ride, etc. Again, my fault, but your carrier pays for you and mine for me. That’s “no-fault”. Each policy in NY has $50,000 in minimum coverage, and there is no path to reducing the cost in this category. It’s the $50k that makes up most of the premium for this coverage. So, if you have a higher amount than that, the additional coverage is at a negligible amount by comparison. Ultimately, you’ll not find anything noteworthy for savings by messing with your PIP.


Comprehensive, comp, other-than-collision, or my personal favorite; “Act of God” coverage is what covers your car when it’s just sitting there, or while in motion strikes a living animal. Flood, hail, vandalism, fire, and theft are a few examples of when you’d use the comprehensive coverage of your policy. Glass coverage is another piece that comp takes under its wing. It’s optional, but if you lease or have a loan for the vehicle, you must carry it. This coverage is subject to a deductible. That’s the amount you must pay before your insurance carrier enters the scene. Can you find savings here? That depends on your definition of savings. You could increase your deductible and pay more out-of-pocket for this unforeseen damage. The savings will be very little, like a couple of bucks per month. Hit one deer within ten years or so and you’re likely to come out on the losing end. Another fact about comprehensive is you must have it if you want to carry collision.


This is the part of your policy that protects your car and it’s more expensive than its counterpart comprehensive. If you back-up into the shopping cart return at Target and take out your bumper (and the back-up cam) this is the part of the policy, you’ll be looking at. For that busted up cart return though, go back, and read that part about property damage again. Like comprehensive, if you lease or finance the car, you are obligated to have it. Your collision damage to your car is also subject to a deductible. Collision is where you might find the greatest amount of financial flexibility. Suppose you had a $500 deductible. You could double it to $1,000. However, your savings will not be 50% of the premium for the change. In fact, it could be hardly anything, and you’d be shouldering an additional $500 for every claim you make!

So, if on your journey to trim expenses you should pull up the car insurance bill, first decide what you’re willing to risk. Is reducing coverage for minimal savings worth it? Can you afford to pay for larger losses? If you’re down to trimming expenses like this, then probably not. Rather than chop up the existing policy, maybe it’s time to shop the whole thing. I can’t tell you how many times we have quoted out a policy with another carrier and found savings without changing a single thing. It’s also not unusual for us to find more coverage at a lower premium. If you find the cost of your current car insurance to be a problem, maybe we can help.