Everybody loves to cut cost, save more money and spend less. Having a car insurance can actuality shift from the real purpose of mitigating costs to becoming a financial burden. When appropriate measures are not put in place adequately, car insurance can really make go borrowing. Below are 15 fabulous strategies for lowering car insurance costs.
Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim. Decide how much you can afford to spend out of pocket; then, adjust your deductible accordingly.
Every insurance company has a laundry list of obscure discounts you may qualify for but they don’t do a lot of advertising for. Here are some common ones you can ask your agent about:
Occupational Discount: Some professions like a policeman, firefighter, doctor, dentist, nurse, and teachers qualify for special discounts because they tend to drive less and/or take fewer risks. Smart ‘Riskologist’ trick: If your occupation could technically fit a number of different fields, try filling out your application with each one to see which produces the lowest premium.
Affiliation Discounts: Were you ever in a fraternity or sorority? Member of your state’s bar or any other professional group? There could be a discount for you. Ask for it!
Paperless Statement Discount: It costs money to stuff and mail envelopes, and some insurance companies will give you a discount if you opt for paperless statements.
Armed Forces Discount: If you are or ever have been in the military, many insurance companies will offer you a discount. I have no idea if this is based on actuarial tables or if it’s just gratitude.
Garage Parking Discount: If you park your car in a garage instead of a driveway or on the street, it’s at a lower risk of theft/vandalism, and you can get a discount accordingly. Only applies to suckers with comprehensive insurance.
Anti-Theft Discount: Ask your provider if you can get a discount for having an anti-theft system installed in your car. Only applies to suckers with comprehensive insurance.
Good Student Discount: If you’re in school and you have good grades, you’re probably a lower insurance risk; most providers will give you a better deal if this is the case.
Early Switch Discount: As a marketing tool, some insurance companies offer a discount if you switch to their service at least 2 weeks before your current policy expires.
Not sure what discounts your insurance company offers? It’s easy to find out. Just call them up and ask, “Hey, what are all the possible discounts I could qualify for?” They’re happy to tell you
3. Maintain a good credit record
Establishing a solid credit history can cut your insurance costs. Most insurers use credit information to price auto insurance policies. Research shows that people who effectively manage their credit have fewer claims. To protect your credit standing, pay your bills on time, don’t obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.
Safe drivers are rewarded with a better insurance premium. Avoid speeding and stay out of accidents, and you’ll save 5% or more on your premium. Most companies will further reduce your rate every time you go three years without a traffic violation
5. Get a Quote Before You Buy
Before buying a new vehicle, call your insurance agent to find out how much it’s going to cost to insure it. Premiums can vary widely based on the make, model and year of a vehicle. It is one instance where smart shopping pays.
Are you an infrequent driver? Then, tell your insurance agent about it. Less time on the road means less opportunity to get into an accident, and this often translates into a lower premium for you. Are you a carpooler? Then, be sure to mention this as well. There’s more than one way to earn the low-mileage discount.
7. Buy a Safe Car
Choose a car with added safety features like airbags, anti-lock brakes, electronic stability control and automatic seat belts, and your smart choice will be rewarded with another discount.
Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet. Your state insurance department may also provide comparisons of prices charged by major insurers.
You buy insurance to protect you financially and provide peace of mind. It’s important to pick a company that is financially stable. Check the financial health of insurance companies with rating companies such as A.M. Best (www.ambest.com) and Standard & Poor’s (www.standardandpoors.com/ratings) and consult consumer magazines.
Get quotes from different types of insurance companies. Some sell through their own agents. These agencies have the same name as the insurance company. Some sell through independent agents who offer policies from several insurance companies. Others do not use agents. They sell directly to consumers over the phone or via the Internet.
Don’t shop by price alone. Ask friends and relatives for their recommendations. Contact your state insurance department to find out whether they provide information on consumer complaints by company. Pick an agent or company representative that takes the time to answer your questions. You can use the checklist on the back of this brochure to help you compare quotes from insurers.
9. Ask about group insurance
Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups or from other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.
10. Drive less often/lower your annual mileage.
In addition to the car you drive and the insurance you purchase, there are some simple things you can do that make insurance agents actually want to throw cash at you like you’re their favorite stripper. Driving less is one of these things.
An insurance underwriter is concerned with just one question: how likely are you to cause a wreck and cost them a lot of money?
One of the biggest factors they’re going to consider is how much you actually drive. When you’re not in your car, you’re not a risk to your insurance company.
My insurance policy is based on the lowest tier of miles traveled each year—less than 5,000—and I save a boatload of money for it. This is because of your odds of being in a wreck increase linearly as you drive more miles. So, cutting the number of miles you drive by 50% equally lowers your risk of an accident by 50%. Less exposure = less risk.
Get a job closer to home!
Stop driving to the convenience store down the street!
Group all of your insurance policies—auto, home/renters, etc.—at one insurance company, and you’ll earn a multi-line discount, good for up to 10% off of your total premium.
Work Your Connections
Are you in the military, a teacher or part of some other professional group? If so, check with your employer and your insurance company to see if any group insurance discounts are available. Geico offers a 15% military discount, for example, while Farmers offers discounts to a number of groups.
13. Reduce coverage on older cars
Consider dropping collision and/or comprehensive coverages on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost-effective. Auto dealers and banks can tell you the worth of cars. Or you can look it up online at Kelley’s Blue Book (www.kbb.com). Review your coverage at renewal time to make sure your insurance needs haven’t changed.
14. Skip Roadside and Car Rental Coverage
Your auto insurance probably comes packaged with a lot of extras that you don’t need—roadside assistance and car rental coverage being two possibilities. Go over your insurance policy line-by-line, and ask about removing any coverage that you don’t need.
15. Work Your Senior Status
If you’re over the age of 55, you may be eligible for still more discounts. Check to see if your insurer offers a discount for retirees or for taking a defensive driving class. Also, check to see how AARP’s senior rates compare to your current premiums.