When you with your car insurance agent, it is likely that you have another appointment set: your grocery list, your business meeting, the kids, the yard work. You just signed the papers and listen to less than half of what the agent is saying. When it is time to renew your policy, you review the paperwork and begin to wonder if those high monthly premiums are a result of carrying too much insurance on your vehicle. But how do you know if you're over-insured?
In a sense, driving a car that's over-insured is preferable to being uninsured especially in Jakarta, Indonesia where accidents happen every hour and it would be better that during these times, your wide scope of insurance is there to save you. However, the amount of liability coverage the law requires you to carry might be lower than the amount you're paying for each month.
But whether or not this is a good idea depends on your financial situation. If you cause an accident and the damages exceed your coverage, a lawsuit could target your financial assets -- your home, salary and certain investments -- to make up the difference.
Beyond carrying less liability coverage, you can prevent your car from being over-insured by eliminating redundancies in your insurance policy. Your insurer might also push you to sign up for extras like towing and roadside assistance, but if you have a membership with the American Automobile Association (AAA) or a similar group, these services are already covered.
If you drive an older car and have collision and comprehensive coverage on your insurance policy, you might consider dropping them. Collision coverage pays for damages caused to your car during an accident, regardless of your responsibility; comprehensive coverage pays for repairs stemming from vandalism, cracked windshields and other non-collision forces.
It's also possible to be over-insured when you're behind the wheel of a rental. Look at the rental company's insurance policy and cross-reference it with your personal auto insurance policy. Chances are you don't need the extra coverage that the clerk tries to sell you, and you might even be covered by your personal auto insurance policy or through the credit card company you use to reserve and pay for the rental.