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By Eric Dinallo
Superintendent of the New York State Insurance Department

Cutting corners on auto insurance, or even dropping it, may seem like a tempting path for a cash-strapped consumer. However, the risks of doing so may be far more costly than an insurance premium. Besides, there are better ways to save on insurance.

There is evidence that there are more uninsured drivers because of the tough economy, but by doing so, people place themselves at risk, both legally and financially. Even underinsured drivers involved in serious accidents expose themselves to significant risk.

Drivers causing accidents involving uninsured damages, or damages exceeding the amount of the insurance purchased risk losing their assets, up to and including their homes. While consumers must have the minimum auto insurance required under the law, they should maintain coverage that is adequate in relation to protecting their assets.

Consumers should consult with their insurer to determine what best meets their needs. Many consumers select optional collision or comprehensive coverage. Consumers concerned about obtaining additional protection against the consequences of serious accidents may select higher no-fault, bodily injury and property damage liability limits.

Under state law, specific minimum insurance coverage – no-fault, liability and uninsured motorist coverage – must be maintained to drive a car or to register and obtain license plates for a new car. The law requires that insurance companies notify the state Department of Motor Vehicles of changes in the status of insurance coverage. This includes notifying the DMV when coverage has ended.

A lapse in insurance can result in either the suspension or revocation of a driver’s license and/or the motor vehicle registration. Court fines can be as much as $1,500 for driving without insurance and there can be a $750 civil penalty to get a license back after a revocation. Lapses in coverage can also result in more costly policy premiums when re-applying for insurance.

Whatever level of coverage they select, consumers can still consider practical, common-sense options that may be available to reduce insurance costs. These include:

  • Updating the policy – A consumer’s first rule of thumb should be to make sure his or her policy is up-to-date. For example, if a younger driver has recently moved away from home, the policyholder may be eligible for a lower rated premium.
  • Shopping – Consumers should always shop. New York is a highly competitive insurance marketplace with more than 200 different auto insurance companies. Consumers may wish to consider various price quotes before selecting a policy.
  • “Careful driver” and other cost-saving features – Many insurers offer “careful driver” rates for individuals who do not have a record of accidents or motor vehicle convictions. Some companies offer reduced rates to motorists driving a lower than average number of miles per year, or those who carpool. Also, drivers are eligible for a premium reduction, as well as a reduction in violation points against a driver’s license record by taking a DMV-approved accident prevention course. Additional information can be obtained from the DMV.
  • Memberships – Drivers should check with their employers or professional organizations about possible savings that may be available to them as members.
  • Discounts for special auto equipment – Drivers whose autos are equipped with automatic seat belts or air bags, factory-installed anti-lock braking systems, anti-theft devices, or daytime running lamps qualify for state-mandated discounts.
  • Saving on older cars – A driver may want to consider dropping collision and/or comprehensive coverage on an older vehicle. While there are no set rules for determining when to drop these coverages, a driver should consider the age, value and condition of a vehicle in relation to the cost of the coverage and the deductible.
  • Increasing a deductible – Increasing a deductible on collision and/or comprehensive coverage may make sense but a driver must determine whether the monthly savings on a premium is worth absorbing the potentially larger portion of a loss in the event of an accident, or if the vehicle is stolen.

Consumers who need help understanding their insurance needs should contact their insurance agent, broker or company. They should also always feel free to use Insurance Department consumer resources. Detailed information on auto insurance can be found on the Department’s website at They may also speak with Consumer Services Bureau personnel between 9 a.m. and 4:30 p.m., Monday through Friday toll-free at 800-342-3736.


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