Many people are barely making ends meet in the recession and are looking for ways to cut costs. Is it wise to drop your insurance as a way to save money in a recession?

According to the AP, now is the time to shop around for the best insurance deals rather than just drop your insurance because so many companies are trying to attract new customers to replace those leaving.

Reducing insurance coverage, whether it’s a consumer or a small business making the cuts, does mean instant cost savings. But it’s proving to be problematic for some people, leaving homes and businesses underinsured and their owners facing huge monetary losses should disaster or illness strike. It’s also making families vulnerable to financial hardship because some are giving up their life insurance.

“The economy is prompting a lot of people to reassess or re-evaluate everything everywhere and they are looking to make sure they are getting the most for their money,” said Mark Gibson, assistant vice president of advertising for State Farm Insurance Cos. “Our industry is no different.”

That creates something of a buyers’ market. Many consumers are shopping around for the best price.

After receiving a rate increase notice last year for polices on two automobiles and two homes, Justin Gregonis decided to leave his current insurance provider and go with a cheaper company. Gregonis, of Phoenix, said he was able to get the same amount of coverage without changing his deductibles for a savings of about $1,200 a year.

“I was willing to go with whomever was going to get me the best rate and have the best coverages,” he said. “Insurance in itself is just basically like playing the lottery. It’s just a gamble, but you have to have it.”

If you find yourself wondering if it is a good idea to drop your insurance as a way to save money, be sure to shop around to make sure you are getting the best deal on insurance first. Insurance quotes are free and only take minutes!