The number of people looking for information on how to cut on their insurance costs has been on the rise in the recent past, as more and more people try to find ways saving money in the face of uncertainties about job security, as well as the security of other alternative income streams. One of the costs that many people have been very keen on finding ways of cutting on is the cost of insurance; which is really an understandable thing, as so many of us feel that we are paying what can only be termed as ‘unjustifiably high premiums’ on the various types of insurance we hold.

In response to the needs of the numerous people looking for information on how to save on insurance costs, various resources – from articles to e-books and even audio-visual clips have been developed, offering people tutorials on how they can save on insurance costs.

But while the efforts being made educate people on how to save on insurance costs are certainly appreciable, a fact that tends to get crowded out in the din that the theme of ‘saving on insurance costs’ generates is the fact that it is just as important to know how NOT to save on insurance costs as it is important to know how to save on the same costs.

To understand how NOT to save on insurance costs, it is important to first appreciate the fact that for any given risk, there are different levels of insurance coverage possible. In case what you are looking at is car insurance, for instance, the different levels of coverage possible range from where the insurance only covers against harm that the insured car could do to other people and their property (besides the owner) – which tends to be mandatory in most jurisdictions, to a level of coverage where both the car owner, besides being insured against liability for the damages his car could cause to others, is also covered for personal injury that they may suffer from an accident involving the car, with the level of coverage sometimes going as far as to include compensation to the car owner for the car itself should it be written off in a grisly road accident.

Now having understood the fact that insurance coverage comes in different levels, then, it follows that the way NOT to save on insurance costs is ‘any way that involves compromising on the insurance coverage.’ For instance, if a potential insurance coverage saving involves having your premiums ‘slashed’ by $30 per month (which at $360 per annum might seem impressive) – but where in exchange for the $30 ‘slash’ you have to do away with the clause in fine print which offers you compensation for the car should it be written off during a grisly accident, then obviously going for the cut would be quite irrational. This is because for a $30 insurance premium cut, you would be keeping yourself open to the possibility of losing your car without any hope of compensation whatsoever should it get involved in a bad accident during that period – which might seem like a remote possibility, but which is still something that can happen.

The moral here is that any way of saving on any type of insurance policy that involves compromising on the level of coverage should be approached with a lot of caution, and even skepticism.